Will the shine last?

COMMODITY WATCH

December cold; January gold.

If gold behaved even half as tricky, as winters are playing this December, precious markets will get a bit more interesting. It is seven weeks since we put our last update on gold with a potential target price turns on gold at $640 around November 24.

The metal dipped 3 per cent from our targets since then. This is marginal and does not really bother any gold bug. Plus, how does the bug care, whether it's winter or summer, oil prices or weather have nothing to do with gold. True, isn't it?

We at Or-phe-us feel that nothing in the capital market works in isolation. It's like the butterfly effect. A storm can be created by the flap of a butterfly wings thousands of miles away.

The same way an innocuous snow flake in Iceland can create huge volatility in MCX gold. Funny, isn't it? If this is funny than what about, warm winters that push oil up, the crisis in oil, which brings prices crashing down from $78 to $55 and what about the great zinc mergers that bring zinc prices down by 25 per cent? If all this can happen, then why can't snowflakes or butterfly wings cause a storm in MCX gold?

We will debate about this soon enough. At this stage we look down for the short term. The wave up from the October low has been a clear five wave structure, which ended near $640.

As a rule prices retrace 0.382 or 0.5 Fibonacci after a five wave impulse completes. At this stage we have barely finished 0.382 and the retracement still seems wanting.

Overall, we still believe that metals continue to move against a price overhang. Above $640 many things change for our gold count.

The anticipated resistances ahead for global gold and silver and MCX gold near are at $640, $13.2 and Rs 9,300 respectively came in visibly and clearly. At these prices, the above resistance levels will continue to hold.

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