The downside appears quite limited at present...There are factors pointing to further gains in the gold market in the short term. |
The downside is largely capped at $535. |
The fund interest is still very strong, probably also encouraged by the latest CFTC data that shows a fall in the net length, giving speculators more confidence to extend their long positions. |
The market conditions are likely to remain quite nervous over the next few days and near-term weakness in the TOCOM (Tokyo) market cannot be ruled out. |
The market conditions are likely to remain quite nervous over the next few days and near-term weakness in the TOCOM market cannot be ruled out. |
The market has been rising without any major correction since late last year. This sort of correction was largely anticipated and it could be taken by some as a healthy feature to the market. |
The platinum group metals remain well below their recent peaks. |
The strong price action and impressive technical trends in various currencies suggest prices should remain elevated in 2006. |
The weaker (gold-dollar) correlation late last year and early this year was due to the overwhelming enthusiasm among the speculative community to drive prices higher. |
There is no market-specific impetus for fresh long positions to be established at present. Sentiment has been weakened by weakness across commodities over the past few days and the dollar is holding up well. |
There is still a negative stigma associated with hedging. |
This has the potential to push prices higher. Gold has always had a traditional role as an asset which holds its value in times of uncertainty. |
We believe that the fund interest in silver is built upon a much narrower base of investors than gold, leaving it more vulnerable to big price moves in either direction. |
We expect the market to remain in consolidation mood for now, though thin trading conditions ahead of the long holiday weekend could well spark big price movements. |
We have not seen evidence of good physical demand at lower levels. Prices have been primarily driven by funds and, therefore, are vulnerable to sell-offs, should funds decide to exit the market. |