Market Commentary

Ø Gold opened lower at 1640/1641 with it reaching an intraday high of 1642/1643 quickly after. News of Euro-zone countries possibly facing an “imminent” downgrade by S&P sent investors on a flight to safety. As the dollar made strong gains, gold retreated to its intraday low of 1625.25/1626.25 mid morning. The metal recovered slightly to close the week at 1630.25/1631.25.

Ø Weaker commodities overnight saw silver open lower at 29.80/29.85. Declines in base metals and crude dragged silver to its intraday low of 29.43/29.48 mid day. An attempted recovery on renewed buying interest brought the metal back up to its intraday high of 29.95/30.00 mid day. The metal was unable to hold against the downside pressure on commodities however and eventually slid back to close the week at 29.53/29.58.

Technical Commentary:

Ø Gold is closing higher this week at 1630. The metal had a reasonable advance but ran into key technical resistance near 1667. This is the second up week off the December low of 1523 and represents only the second consecutive week of gains in over 10 weeks in time frame that saw Gold fall from 1803 to 1523. Elliot wave studies suggest 1667 is critical level as it represents furthest advance of wave 1 in move that started at 1803. This latest up move is considered the wave 4 pull back. Wave 4 can not overlap wave 1 so while 1667 holds we could see another quick drop to 1523. Stop loss buying of Gold will emerge above this level.

Ø Silver is closing the week higher at 29.53. This is the first time we have seen consecutive up weeks since October. The metal tested as high as 30.71 before retreating to current levels. The 30.71 is also viewed as an Elliot wave technical resistance. While below 30.71 the view remains for a test of 26.10. The Gold Silver ratio is lower at 55.21. The past two weeks, the metal has attempted to close back below key 61.8% Fibo at 54.35 but it continues to hold. While above 54.35 we expect a move to 59.70 the 76.4% level.

Technical levels for 16^th Jan, 2012:

Metal	Support ($/oz)	Resistance ($/oz)
Gold	1,621.45	1,656.11
Silver	29.073	30.408

Economic Calendar:

Date	Economic Indicator	Country	Actual	Forecast	Previous	Effect & Remarks
13th Jan	Trade Balance	USD	-47.8B	-44.8	-43.5	As Actual < Forecast =Not Good for currency. Difference in value between imported and exported goods and services during the reported month has Increased
13th Jan	Prelim UoM Consumer Sentiment	USD	74.0	71.2	69.9	If Actual > Forecast = Good for currency. Level of a composite index based on surveyed consumers has Increased.

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