Commodity Trade Mantra

Gold, Silver trades expected to be volatile.

Gold, Silver trading

Gold, Silver trades expected to be volatile.

Gold may now face resistance at $1605 & then at $1657 levels. Gold will get hyper Bullish only on a break with sustained momentum above $1765 to $1801 range.  A decline with a repeat close below $1540 may send Gold sharply down to $1270 levels also. Silver may now face immediate resistance at $29.71, $30.70 & then at $32.50 levels. A longer term strong Bullishness in Silver will be triggered only on a sustained break above the $33.40 to $34.75 range. Silver has underperformed gold this month, on track to decline 7.6% after falling to its lowest price this year at $26.73. 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. Holdings of silver-backed exchange-traded funds were at a one-month high on Friday at 489.3 million ounces, though they remain around 7% below the record high they hit in April 2011.

Gold remains firmly tied to the currency markets, climbing earlier in the day after opinion polls ahead of next month’s Greek elections showed pro-bailout conservatives in the lead, lifting the euro on hopes Greece may stay in the euro zone. The news boosted assets seen as higher-risk across the board, but European shares later pared gains on fears over the outlook for Spanish banks, while oil prices also came off highs. The bond markets pointed to ongoing worries over euro zone debt, with the premium investors require to hold Spanish government bonds over their German counterparts earlier on Monday hitting its highest level since the euro was launched.

Data from the U.S. Commodity Futures Trading Commission showed that in the week ended May 22, speculators cut net bullish bets on U.S. Gold to the lowest level since December 2008 as the rise in short positions outpaced the up tick in longs.

A release from S&P/Case-Shiller today is expected to show U.S. home prices declined 2.6% in the 12 months through March, the smallest decrease since the year ended December 2010 & the Conference Board’s consumer confidence index climbed to 69.5 this month from 69.2 in April, according to economists.

A seasonally weak-demand period is currently seen for Gold in India, its biggest global consumer. Physical demand remains depressed by the weak rupee. The wedding season is coming to an end and the monsoon is approaching. Fresh physical buying in India will now commence during the festive seasons starting August 2012.

The INR declined to a new low of 56.38, as also indicated earlier on the break of the important 54.28 support level. The Indian Rupee has a strong resistance at 55 now, which if breached strongly, will lead to 52.75. But if the INR declines from the rise to 55 as seen today, then the lower level of 56.35 will again be tested, which in turn if breached, may trigger fresh downside bearish momentum towards 58.60 per US Dollar as also alerted earlier.

 European firms plan for Greek unrest and euro exit.

Shares of Bankia, which had been suspended on Friday, ahead of the bailout news and took several minutes to begin trading on Monday, sank to an all-time low of €1.11 at one point, but ended off 13% to €1.36, according to FactSet Research.

On Friday, Bankia said it would need to ask the government for a bailout of €19 billion (around $24 billion), a figure that exceeded some estimates calling for a recapitalization of around €15 billion. The bank, formed of a merger of several savings banks, is a casualty of the collapse of Spain’s housing market that triggered a recession and ignited another leg of the sovereign-debt crisis.

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