Commodity Trade Mantra

Gold Prices remain directionless & volatile On European Crisis

Gold Prices

Gold Prices remain directionless

Gold prices poised for the worst run of monthly losses in almost 13 years as concern that Europe’s fiscal crisis is escalating drove investors to seek the dollar as a haven over the precious metal. Bullion is 6.1% lower in May for its biggest drop this year as the dollar rallied 5.4% against a six-currency basket including the euro. A fourth monthly decline would be the metal’s longest run of losses since the period to August 1999.

Gold prices: Gold for June Delivery above $1556.2 can rise to a resistance of $1578.7 & again decline. Only on a rise with sustained momentum above $1580.5, Gold prices may rise further to $1593.1 & then to $1616.5 also. Gold price for August delivery will then face strong resistance around $1657. On further strength of theUS$/ Euro, Gold may slip to a support of $1539.5 on a decline below $1552. But a decline with a strong momentum below $1537.3 will push Gold price for June Futures sharply down towards $1515.7 & then to $1499.5 also. A close below $1540 will indicate a strong bearishness for Gold prices & Gold prices may sharply decline to $1270 levels also.

Silver prices: Silver July Futures above $27.91, may rise to a resistance of $28.30. Only on a rise with sustained momentum above $28.36, Silver prices may rise further to $28.63, $29.08 & then to $29.53 also. On a downside move below $27.73 Silver may slip to $27.50. But a decline with a strong momentum below $27.46 will push Silver sharply down towards $27.04, $26.74 & then $26.32. Silver, as repeatedly alerted, has a strong technical support at $26.20 on the downside. Any breach with a sustained momentum on closing basis below this range may signal a strong bearish trend for Silver & may decline further to $22.60.

Italy failed to meet its maximum target at a debt sale yesterday, Spain struggled to bolster its banks and a Greek poll showed gains for parties opposed to austerity that came with an international bailout, driving the euro to a two-year low against the dollar. Data showed Japan’s industrial production rose less than forecast in April, while the number of Americans buying previously owned homes fell in April by the most in a year, helping Asian stocks and commodities including oil and copper extend declines today.

The daily correlation coefficient between gold and the dollar is at -0.301, compared with -0.169 in October. A figure of -1 means the two tend to move in opposite directions, and 1 means they move in lockstep. Holdings in the SPDR Gold Trust, the biggest bullion-backed exchange-traded fund, are set for a third monthly decline, according to data on the company’s website.

Gold for August-delivery fell as much as 0.3% to $1,560.70 an ounce on Comex in New York and was last at $1,564. Spot silver fell as much as 0.5% to $27.7625 an ounce, and was last at $27.85. It’s set for a third monthly loss, also the worst run since 2008.

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request your views on the above article

  • Jiignesh

    Well done.
    Perfect analysis, very good call
    Keep it up

  • Jiignesh

    What a level
    Till now Gold June contract high is $1616.80, simply amazing

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