Gold Silver Tips

Much of the current weakness in Gold Futures appears to be only technical in nature. Some traders are exiting positions on disappointment that gold has not able to break above $1,800, particularly after a chart reversal on Oct. 5 when the monthly U.S. jobs report was released. But for the Long term, nothing has changed drastically, except maybe a lack of conviction on failing to cross the $1800 level. Technically speaking, Gold and Silver are both near their short term bottom & could take an upswing. Gold has a reasonable support near the minor congestion area of $1720 – $1726.3 range whereas Silver has support in the $32.05 to 32.41 ranges. This range can provide near-term buying interest. On a remote possibility of longs liquidation occurring on the current Gold Prices softening, if Gold slips below $1720, then Gold Prices may lose the upside advantage & could be seen hurtling towards $1666. Silver, though seems more sustainable on the upside levels, could lose steam if closes below $32 & then could slump to $30.25 also. There is the minor risk of more weakness if support levels in Gold & Silver do not hold. Gold Holdings by exchange-traded products are higher so far in October. Gold ETP holdings continue to flourish with inflows of 10.1 (metric) tons over the past week, taking flows for the month to date to over 30 tons. Inflows for the year to date have now reached 224 tons, surpassing the full year last year (175 tons) but still below y/y flows for 2010 (361 tons). Gold buying of 1.33 million ounces so far in October by Gold ETFs is about 52% of the September inflows. A potential upside catalyst occurs later this week when leaders gather for a European Union summit.

Commodity Buzz : Economic

Brent futures held steady near USD 114 on Wednesday as expectations Europe's financial crisis is on the mend renewed hopes of a revival in oil demand growth, while simmering tension in the Middle East provided additional support.

Asian shares, the euro, base metals and gold all rose after Moody's Investors Service affirmed its investment grade rating on Spain, helping ease investor worries of a worsening crisis in the region. Oil was also supported by supply concerns as the European Union slapped fresh sanctions on Iran.

Brent slipped 12 cents to USD 113.88 a barrel by 0432 GMT. The November contract, which expired on Tuesday, went off the board 73 cents lower at USD 115.07, while the December one settled 40 cents lower at USD 114.00. US oil gained 18 cents to $92.27.

"We are seeing prices react to the investment grade news for Spain, but the demand outlook continues to look weak because of the global economic condition," said Victor Shum, managing director at IHS Purvin and Gertz in Singapore. "Prices are drawing support from supply concerns in the Middle East."

European Union governments imposed sanctions against major Iranian state companies in the oil and gas industry and strengthened restrictions on the central bank.

More than 30 firms and institutions were listed in the EU's Official Journal as targets for asset freezes in the EU, including the National Iranian Oil Company (NIOC), a large crude exporter, and the National Iranian Tanker Company (NITC).

The United States and the European Union are putting pressure on Iran to stop its disputed nuclear programme, while Tehran says it needs the technology to generate electricity.