The Hindu Business Line : Analysts remain upbeat about gold prices

Mumbai June 24 Gold prices continued to be influenced by a combination of dollar movements, oil prices and the US treasury yields. The sentiment is rather muted. On Friday, London PM Fix was $652.85 an ounce, down from the previous day's $654.50/oz.

Speculative Interest

Silver too was subdued with AM Fix at $13.16/oz versus previous day's $13.34/oz. The market for yellow metal is clearly looking for recovery.

Some trigger is required to change direction. Funds continue to exert a huge influence. Lack of speculative interest is palpable. Many believe that the present market provides an opportunity to buy. Technical analysts remain upbeat about gold prices.

In the short-term, even as the yellow metal looks well supported at 646, the focus is higher towards channel resistance at 665 in the near-term, analysts pointed out adding that in the medium term there is reason to remain bullish as long as the metal holds above its 60-week moving average of 638.

Weekly stochastics are fast approaching oversold which puts the odds in favour of basing into the week beginning June 25, they asserted. Back above 665, the bullish stance may be confirmed with target of 675 area next. Choppy range will give way to the topside in the months ahead; above 675 targets 730.

Base metals: Strike threats provide underlying support to copper. The focus of market participants continues to be the threat of potential strikes. On Friday, LME stocks fell by 1,800 tonnes to 117,800 tonnes all of which were outflows across seven geographically widespread European and US warehouses.

Copper Market

Sentiment towards copper has been weighed by robust copper imports in 2007 coupled with hefty Shanghai copper stocks. This is highlighted by the narrowing premium of SHFE copper prices over LME prices, which have raised fears of an oversupply in the Chinese domestic copper market, an analyst pointed out.

However, for the moment, strikes have the potential to disrupt supplies, something that is providing support to the market. In the near-term, chartists are neutral to copper. The market is seen consolidating at the top half of 6950-7695 range.

The longer price remains above 7335 support, the greater the potential for an upside break above this range. A swing target comes near 7785; and above here would be a more convincing sign of a recovery towards 8200-8335 area.

Until then, it is safe to be near-term neutral. A close below 7335 would warn of a return to the range low near 6950.

In the medium-term, however, the copper market has the potential to retest and likely exceed its 2006 peak near 8800.

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