Last Updated : 08 January 2013 at 11:10 IST
We understand the times are weird when the safe haven asset gold starts to behave like silver. “Gold is following silver in volatility...” acknowledges Manoj Kumar Jain, President Commodity & Forex Business IndiaNivesh Commodities Pvt. Ltd.
Both commodities are facing stiff resistances as they try to move higher:
“Gold is having resistance at $1670 and silver at $30 and a few cents. On India's MCX, this translates into a resistance of Rs.31100-150 for gold and Rs.58500 for silver.” Manoj Kumar Jain said.
The currency markets are supposed to play a strong role when it comes to gold, silver movements.
“We may not expect a repo rate cut as inflation rate is still on the rise. If a rate hike revision happens, then it would possibly fall short of expectations.” he added.
Weak dollar or strong rupee may help with price appreciation in gold. But currently the rupee factor is not favorably inclined towards gold.
“Traders who have taken a sell position in gold may sell between Rs.31050 and Rs.31200 and who may want to buy may do it at Rs.30850. In case of silver one may buy between Rs.57600 and Rs.57700. Those who want to sell may do it when the prices are between Rs.58400 and Rs.58500.” he added. This outlook holds good for the rest of the week, he said.
Trade in both commodities would be confined to narrow ranges, he predicted and Rupee movements would be a game changer.
“I expect the markets to be volatile as and when the debt ceiling debate may chart its course. A break out is necessary in case of bullion so that further direction becomes clear.” he said.
Meanwhile Obama has reiterated not negotiating on the debt ceiling similar to that of in 2011.
The President's stance may be heroic but leaves a lot of uncertainty behind. This would possibly set the markets on a zig-zag course as it becomes clear that the debt-ceiling debate would turn out to be a who-will-blink-first game. One of the parties will have to give up on their positions and this is not going to be easy. Silver and gold markets would reflect this stance in volatile terms as volleys trade between Republicans and Democrats.
"If Congress refuses to give the United States the ability to pay its bills on time, the consequences for the entire global economy could be catastrophic," he said. "Our families and our businesses cannot afford that dangerous game again." Reuters quoted him as saying.
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