Gold traded close to the lowest level in more than a week. Comex Gold prices ended with moderate losses yesterday, on more profit taking and technical consolidation on the charts. A stronger US Dollar index has also lent selling pressure to Gold and Silver early this week. Gold and Silver yet are in Bullish zone with downsides seemingly limited amid prompt bottom fishing. Gold and Silver have been consolidating at lower levels since over a week now & seem poised to take on a new leap upwards. Gold Futures for December delivery on the Multi Commodity Exchange – MCX Gold was higher at 31,450 rupees per 10 grams, after hitting a high of 31,475 INR, a level last seen on October 1, helped by a weaker Indian Rupee. The Indian festival and wedding season will start picking up in late October and peak next month during Diwali and Dhanteras, traditionally the occasions for buying & gifting Gold Bullion or Jewelry in India. Comex Gold yet has substantial support around $1747 & then further below at $1720. Upside target remains steady at $1855. Silver has been struggling to break above the resistance of $35.20 & once it closes above this, it enters a strongly bullish zone. Silver has substantial support around $33.
Aluminum declined to the lowest level in a month, retreating for a fourth day, after Alcoa Inc. cut its forecast for global demand citing slowing growth in China, the world’s biggest user. Palm oil advanced for a second day to the highest level in more than a week after Malaysia, the second-biggest producer, signaled that it may reduce a tax on exports after prices slumped to a three-year low last week. Most Agro Commodities have been seen rising sharply as alerted last week after very sharp corrections. Rising Crude Oil rates along with rising Agro Commodity Prices are a deadly & a perfect combination for sharp Inflation rises. Gold & Silver would naturally be the choice for hedging against Inflation.
Tensions in the Middle East have also ratcheted up a notch as Syria and Turkey are exchanging artillery fire on their borders. Also, Iran’s President said he is very alarmed by his sanction-strapped country’s inability to meet its budget. Spain has yet to ask for formal EU bailout assistance, even though European Central Bank president Draghi said Tuesday the ECB is ready to implement its bond buying program should Spain ask for assistance. The US dollar index traded solidly higher yesterday on some short covering in a bear market. With little fresh economic data slated for release this week, the markets are likely to focus on the Euro-group meetings & outcomes.
The key focus will be on Spain and Greece, and while positive progress is expected to be made on both accounts, a number of banks do not expect that the event will provide headlines that deliver a major catalyst for the market. Spain Prime Minister Rajoy is likely to wait until after regional elections on Oct. 21. Meanwhile, on Greece no major action can be made on the decision to allow more time for the country to meet its goals until the Troika has completed its review. Chancellor Angela Merkel expressed solidarity and friendship with Greece during her Tuesday visit in Athens with Prime Minister Antonis Samaras. On the streets outside, however, protests revealed the strain Greek society is under. The German chancellor’s visit will do little to improve the situation. Merkel’s visit was not limited to her meeting with Samaras. She also met briefly with Greek President Karolos Papoulias. 40% of German exports are delivered to partners in the Eurozone. Any further fractures in the common market could hit Germany hard.
Total assets of Gold ETFs – Exchange Traded Funds exceeded the combined total of French and Italian gold stocks, indicating a sharp increase in Gold Investing. Analysts said the total assets of Gold ETF’s added another 95 tonnes in September, driving the stock to a new record high of 2,565 tonnes, which is more than the Gold stock in France and Italy, the countries with the 4th and 5th largest central banks. The world’s largest Gold ETF – the SPDR Gold Trust– has the largest stockpile of physical gold in its history 1,340.5 tonnes. Since mid – September the European Central Bank (ECB), the US Fed, the Bank of Japan, the Reserve Bank of Australia have been taking steps to ease their monetary policy in an effort to help their economies revive. When money is abundant in an economy and real interest rates go into the red, investors try to hedge their risks, usually choosing Gold as a shelter. Gold Prices are bound to move further up then.
Crude Oil has declined slightly from the highest price in a week in New York on speculation that Crude Oil stockpiles climbed in the US, the world’s biggest consumer of Crude Oil. November Futures of Crude Oil remain strong till trading continues to move above $91.45 with an upside targeted for $93.75 the first strong resistance. Crude Oil Futures once above $93.88 would look further up to rising towards $95.35 & then $97.39. Crude Oil Futures surged 3.4% yesterday amid increased tension in the Middle East. Crude Oil inventories probably rose 1.5 million barrels last week, according to a Bloomberg News survey before an Energy Department report tomorrow. The American Petroleum Institute will release separate supply data later today. London-traded Brent prices are still high and Saudi Arabia will work toward “moderating” them, Oil Minister Ali al-Naimi said yesterday. There’s upside risk on the geopolitical side, but then of course there are headwinds from slowing growth. Crude Oil surged yesterday after Turkish guns fired on Syrian artillery units and tanks for a sixth day. The attacks follow the deaths of five people struck by a Syrian shell in Turkey on Oct. 3. Tension between the two countries has risen with the 19- month rebellion against Syrian President Bashar al-Assad’s government, as Turkey has offered support for the rebels.
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