-- Posted Monday, 21 June 2010 | Digg This Article
| | Source: GoldSeek.com
China’s central bank signaled an end to the currency’s two-year peg to the dollar. A stronger yuan is in the offing but how long will the yuan rise is still an uncertainty. There is no information of how much will the Chinese central bank allow the yuan to appreciate. We need to wait and watch for three day to four days as to how the markets react to the Chinese move. Asian currencies will appreciate further against the US dollar. Base metals, particularly copper, have rallied after the Chinese move. But I will treat the same with a bit of caution and will prefer to watch today and tomorrow’s US session before investing for the short term. It’s too early to be very bullish in base metals for the short term. Unless there is positive news from Europe gold and silver will continue to rise. After a week or so the markets will switch focus once again to Europe.
Other than investment demand there is no reason for gold to rise and when there are secure alternate sources of investment gold prices will fall. Technically gold can rise to $1354 and $1425 as long as it trades over $1196. However the quicker the rise in gold prices the chances of an even bigger pullback are greater.
Silver needs to trade over the $1890-$1945 zone for the whole of 2010 to be in a position to target $2400+. As and when silver trades below $1890-$1945 there is every possibility of it falling to $1750 and $1450 while maintaining the long term bullish trend.
Comex copper will trade in a wider $250-$380 range for the rest of the year. Unless either of these ranges are broken convincingly this wider range will continue for the rest of the year.
The key long term support for crude oil is at $57.30 and long as it trades over $57.30 crude oil will rise to $109.80 and $127.60 in the next twelve months. In the short term there can be a correction to $69.10 and $62.60 if crude oil does not break $88 by the end of July. The hurricane season in the Gulf of Mexico will prevent traders from going to short at lower prices.
Indian physical gold prices need to break and trade over INR 19,600 for further gains. As long as gold does not break INR 19600 it will fall to INR 18,000 and below before the next wave higher. In the next twelve months Indian physical gold prices can rise to INR 21,000 and INR 23,000 and yet fall to INR 16200 and INR 14500. I am serious and not joking. Volatility will be very in gold prices.
As far silver is concerned I remain bullish and do not foresee physical silver prices to fall below INR 22000 per kilogram in the next eighteen months under the worst case scenario with every possibility of INR 37500 and INR 47500. There will be a technical breakdown as and when silver prices fall below INR 22000 in the long term to INR 18500 and INR 15500. In the short term as long as silver trades over the INR 25500-INR 26500 zone it will rise to INR 35000+. I will prefer to wait for a correction and then invest in silver for the long term.
I continue to remain bullish on the US dollar-Indian rupee (USD/INR) in the long term and expect it to fall to 43.30 and 41.50 in the next twelve months. However it will not be one way traffic for USD/INR and it will weaken to 47.10 and 51.8 as and when global stock markets plunge. The India rupee is very vulnerable to changes in global stock markets in the short term. Long term bullish of USD/INR remains intact on sound economic fundamentals.
Euro/usd needs to trade over 1.2525 for a fortnight to be in a medium term bullish zone. In case it is unable to do the same before end September 2010 it will fall to 1.1800 and 1.1200. The big question whether Spain defaults. I am bullish on euro/usd in the third quarter and a medium term bottom have been formed around 1.1800
Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. Prepared By Chintan Karnani. Website www.insigniaconsultants.in
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-- Posted Monday, 21 June 2010 | Digg This Article | Source: GoldSeek.com
