-- Posted Monday, 9 August 2010 | Digg This Article
| | Source: GoldSeek.com
GENERAL MARKET CONDITIONS/FUNDAMENTAL FACTOR
Incoming economic data from the US suggest that a mild slowdown is in the offing. The US July non farm payrolls was below market expectation which resulted in the US dollar getting slammed. But in my view the data is not as bad as the markets perceived. Base metals and US equities recovering from the lows are evidence of the not as bad economic number. But one thing is for sure, the Federal Reserve will keep interest rates on hold till the middle of 2011 unless inflation zooms. We have the Fed meeting this week. I do not expect anything new from the Fed meeting.
China opening up its gold market is very positive news for gold which suggest that $1500 by 2011 will be definitely there. The Chinese are more of a traders cum investor mindset and they can sell their gold and gold investments as and when they have better investment avenues or they feel that gold will prices will crash in the medium term. This is unlike Indians who mostly buy gold and forget. However gold as a pure investment is catching up fast in India.
A weaker euro will have lagging effect by way of higher exports. It remains to be seen how long this trend continues and the euro/usd continues to rise. I have my doubts over the recent growth in eurozone and gains made by the euro/usd. Short positions in euro have more or less been covered and fresh longs are being created. This trend can continue for another three months at the most and thereafter the eurozone economy as well as the euro should fall. A strong euro will be very positive for gold prices in the medium term to long term if accompanied by mild economic slowdown.
Russia has drought whereas a large part of Asia has floods. Australia has had a bumper crops while other regions in the world are suffering from crop losses. Last year Australia had crop losses. Wheat, sugar, rice and food grain prices have more than doubled in less than three years. Our salaries have not doubled. The end result of greater expenses in food and less expense on other needs is Food price inflation could be a theme over the coming years. Russia has banned food grain exports. Other governments could also follow whether now or over the coming years. But India is a bit different as it lets its good wheat crop rot due to lack of storage facilities. The headline inflation is not an indicator of actual inflation. The rise in metal prices and energies does not affect the common man but food prices rise puts a big hole in their pocket. We need to have a weekly food price inflation number also.
COMEX TECHNICAL VIEW
COMEX GOLD DECEMBER
Bullish over $1197.0 with $1216 and $1227 as price target
Bearish below $1194.10 with $1189.80 and $1179.80 as price target
Neutral Zone between $1194.10-$1197.10
A consolidated break of $1212 will result in $1227 and $1242. Intra day fresh wave of selling will be there below $1197.
MCX GOLD OCTOBER
Bullish over 18140 with 18270 and 18480 as price target
Bearish below 18032 with 17976and 17800 as price target
Neutral Zone: 18032-18140
Gold targets 18275 and 18500 as long as it trades over 18140. Intra day fresh wave of selling will be there below 18140 only.
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, 9 August 2010 | Digg This Article | Source: GoldSeek.com
