-- Posted Tuesday, 17 August 2010 | Digg This Article
| | Source: GoldSeek.com
COMEX REPORT
GENERAL MARKET CONDITIONS/FUNDAMENTAL FACTOR
The Federal Reserve meeting turned the market upside down. Its acknowledgement that a slowdown could be in the offing and subsequent indirect liquidity expansion measures resulted in stock markets, base metals and energies falling and gold, the US dollar and other safe havens rising. The current moves by the Fed suggest that (A) Interest rates will not be increased over the next twelve months (B) There will greater circulation of money in the financial markets which will result in higher demand for riskier assets. Increasing liquidity is an indirect way of cutting interest rates which will be very positive for gold. (C) Growth will get preference over inflation. This will be very positive for gold.
Russian wildfire and Russian drought and ban on export of food grains by Russia has created global fears of a sharp rise in food price inflation. Every year there is drought in some country and that country becomes a major importer of food grains. Further over the past few years some of the major food grain exporting nations have also experienced drought. In 2009 there was drought in India, Australia. Indian drought resulted in Sugar and other food grains zooming. Nations are unable to be self sufficient in food grains. To sum it up higher food prices are here to stay due to every rising population, global warming and reduction in area under cultivation. Ever rising food prices can result in governments getting topped, food riots among others. Central banks are ignoring food price inflation as they are not yet reached alarming levels but sooner than later they will look at the same seriously. What if a situation arises when the big food grain exporting nations whom the world themselves becoming importers? I see this happening in the next ten years. Higher food prices and subsequent greater expense on essentials will result reduce GDP growth of nations, real disposable income will be lower. Gold prices will initially zoom if food grain prices rise but later bust when it reaches alarming levels. The man on the street who stays in slums, the masses or the average middle class is not bothered by price rises in gold prices as he does not eat gold. Food prices zooming can result in gold prices as the next bubble.
Every nation is opening up its gold market. The number of exchange traded funds (ETF) are on the rise with the passing of each day. Gold ETF investments are on the rise with passing of each month in every nation. Gold is now behaving like a speculative instrument as well as a currency. This will result in the gold price rising to $1500 by end June 2011 and $1900 by end 2012 and thereafter I see a bust in gold price. As long as global interest rates stay near zero gold prices will continue to rise without any bear phase. The recent July 2010 gold fall from $1266 to $1155 did not even last a quarter.
SILVER UPDATE
Silver has been trading in the $1750-$1870 range for the past three past three weeks and this range will be broken soon. Nothing new about this trend as silver has a tendency to range trade for week and months and rise very sharply when it starts to move higher. Silver has been caught between gold and base metals as a fall in either of them is preventing silver from a major rise. The inability of silver to rise has resulted in lower investment demand in silver. Technically silver can fall to $1724 and $1586 before the next leg higher.
Indian silver prices are around INR 29000 per kilogram and buyers are sitting on the fence. The overall short term sentiment in silver in India is bearish but at lower prices demand is expected to be huge. We expect Indian physical silver prices to rise to a minimum of INR 32000 per kilogram before Diwali but before that there can be a correction to INR 27500 and INR 26500. I expect Indian physical silver prices to rise to INR 37000 per kilogram by March 2011. The only risk to my bullish view on silver is a big and sustained crash in global stock markets.
COMEX TECHNICAL VIEW
COMEX GOLD DECEMBER – short term view
Bullish over $1211.80 with $1248.75 and $1275.70 as price target
Bearish below $1195.40 with $1191.00 and $1153.00 as price target
Neutral Zone between $1195.40-$1205.80
Gold prices can rise to $1248 this week as long as it trades over $1205. A fresh wave of selling will be there (a) below $1205 or (b) a failure to break $1248. But sharp corrections should be used as an investment opportunity and nothing else.
MCX COPPER AUGUST
MCX copper can rise to INR 344 and INR 355 as long as it trades over INR 335. For copper to be in bear zone it needs to close below INR 335 for four consecutive days
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 Tuesday, 17 August 2010 | Digg This Article | Source: GoldSeek.com
