GENERAL MARKET CONDITIONS

Traders are going long on gold, silver and energy ahead of the Fed meeting and going short on the US dollar. US housing numbers further added to US dollar woes. The Fed is expected to cut interest rates between 0.25% and 0.50%. The markets will be looking forward to the statement and whether Fed explicitly says that it will cut interest rates in March. It is all about interest rates and growth for the Fed and inflation has been put in the backburner. Gold and silver will remain firm until the outcome of the Fed meeting tomorrow. I will be hesitant to go short in copper as LME stocks continue to slide despite expectations of a slowdown in demand.

Gold will also be supported by greater Chinese demand ahead of the Chinese New year on 7th February. Chinese retail investors have started investing in physical gold in a big way and that Chinese demand will have a greater effect on gold prices over the coming years than gold demand from India.

Momentum in all the metals is bullish and it is better to trade with the momentum and sell only when the momentum shows signs of fading. Silver should finally break out and should rise more than gold. The technical picture of gold is overbought while that of silver and copper is neutral to bullish. As and when profit taking comes up gold, silver, copper and crude oil will fall.

GOLD -- FEBRURAY FUTURE -- INTRA DAY PIVOT:$922.0

Gold is nearing our price target of $934 and $945. For the day as long as gold holds $915.10 the downside will be limited. Gold has to fall below $915.10 for losses.

SILVER -- MARCH FUTURE -- INTRA DAY PIVOT $1676

$1670 price target achieved. Silver targets $1712, $1740 if $1648 and $1628 holds.

MCXARUN
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