GENERAL MARKET CONDITIONS

It has been an impressive rally by gold. Gold's rise has been primarily due to the continuous fall in US and European stock markets. Gold's rise in the first five trading sessions of 2008 has beaten all expectations and has forced analysts to upgrade their short term forecasts. The launch of the first middle east gold exchange traded fund (ETF) further supported gold. Not only gold, but all the metals (including base metals) rallied. Commodities and specifically metals will certainly be the investment theme for 2008 in developed nations.

It’s a momentum market for gold and the momentum is bullish. Technically gold is highly over brought and will be vulnerable for a correction. There is an old saying that "market moves on sentiment" and sentiment is certainly bullish. I am more of a silver bull than a gold bull and hopefully silver should do some catch up with gold. Silver has underperformed in the past two years, but should outperform gold soon. The next three days will be crucial for silver.

Today US weekly crude oil inventories will tell whether crude oil breaks $102 or falls to $92.

GOLD -- FEBRURAY FUTURE -- INTRA DAY PIVOT:$903.60

$876 price target achieved and we are nearing $900 price target. As long as $873.30 holds downside will be limited. If gold breaks $907 then $943.50 is the target.

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