Asian Metals Market Update for 14/12/2007

EXPECTED TRADING RANGE

GOLD FEBRUARY 08 -- $792.0 -- $823.00

I am riding on a “Dune Buggy” as far as movements in the markets are concerned. One day sharp rise, followed by a sharp fall only to recover the next day. This kind of movement has resulted in more and more traders becoming short term oriented and is preventing them from taking a medium term view. However the US dollar has been the catalyst for all the volatility. A weaker dollar results in higher crude oil prices, which in turn supports precious metals and vice-versa. There are still huge short positions in US dollar and positive news like sharp rise November US retail sales resulted in some of the US dollar shorts getting squared off and the subsequent effect on precious metals and energies. The sharp rise in PPI is also due to lower base effect which is continue to affect PPI prices in the first quarter of 2008 as crude oil prices were lower in the first quarter of 2007. If December retail sales perform like November markets will soon be reducing the possibility of a Fed rate cut in January also.

Technical picture gold is bullish. However gold can fall $30 and still maintain the bullish trend intact. However it a momentum markets technical trade is applicable only when key supports are tested. Silver is in the woods and a lower close today will alter the technical picture to short term bearish.

NYMEX CRUDE OIL -- FUTURE

Back to square one as it targets $100 once again. On the lower side as long as $90.40 holds, downside will be limited.