GENERAL MARKET CONDITIONS

Gold rose as the dollar dropped on speculation a slumping U.S. economy will prevent the Federal Reserve from raising borrowing costs. Silver and other base metals followed gold. Once again the US dollar is the key to every thing. Historically the bear phase in August in gold and silver is always a buying opportunity while a bear phase in October implies a sustained one. This is August and one should use the sharp fall to invest.

Base metals, traders are taking positions on expectations that Chinese demand will re start after the Olympics are over and a weaker US dollar. Some of the base metals producers have started reducing production as prices have fallen to the top end of production cost. This has been done in order to prevent prices from further sell off.

At the moment, the rise in gold and silver is just a technical rise which if it continues can restart the short term bull phase in gold and silver. Long term bullishness in gold and silver remains intact. US weekly crude oil inventory will be the key. Gold rose as the dollar dropped on speculation a slumping U.S. economy will prevent the Federal Reserve from raising borrowing costs. Silver was little changed.

INTRA DAY TRADING STRATEGY.

· We will prefer to buy comex gold december around $810 and or over $832.

· Silver (comex September), will prefer to buy around $1306 and $1268 or over $1380.

· Copper (comex September) as long as $319 holds downside will be limited.

· Crude oil has to break $119.10-$122.40 zone for $125 and $128.

· COMEX GOLD DECEMBER

Resistance $810 now becomes the support while $845-$850 is the key resistance zone. Intra day gold has to fall below $810 for $800 and $788.

COMEX SILVER SEPTEMBER

A break of $1380 will result in $1510 and $1560. Key intra day support is at $1260.

COMEX COPPER SEPTEMBER

Copper has managed to hold $319 and will try to break $354 today.

NYMEX CRUDE OIL (1ST CONTRACT)

Crude oil has to break 117, else will trade in wider $109-$117 range.

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