Market Commentary

Ø Dollar gains overnight saw gold open lower at 1703/1704. An initial burst upwards to its intraday high of 1710.25/1711.25 early morning was offset by strong selling after the p.m. fix. Trading alongside equities as they declined, gold reached an intraday low of 1693.75/1694.75. Choppy range bound trading for the remainder of the session saw gold close unchanged at 1703/1704.

Ø Silver opened on its Friday’s close of 34.44/34.49. Tracking crude early in the morning, the metal reached an intraday high of 34.75/34.80. However, steady overnight declines in base metals as China cut its growth forecast and a reversal of crude’s early gains, saw silver reach an intraday low of 33.50/33.55 late in the session. The metal closed the day shortly after at 33.65/33.70.

Technical Commentary:

Ø Gold closed lower at 1703/04, consolidating the moves of the past few trading sessions but managing to remain above last week’s low in the 1688 area. A breach of 1688 would bring in more sellers, targeting an initial move down to the January 25th low in the 1649 area. There is resistance at the March 1st highs at 1726 followed by key resistance from the breached uptrend, currently at 1768. We remain bearish so long we remain below this trendline.

Ø Silver had a bearish close today at 33.65/70, breaching the daily uptrend off the December 29th low. RSI is confirming the move lower and MACD has generated a sell signal. The decisive rejection of silver above 37.30 (the 61.8% Fibonacci retracement of the August to December downtrend) and subsequent break in the uptrend off the December low is bearish. There is key support at 33.00, which is a 38.2% Fibo level which provided very strong support throughout February 16th low in the 32.65 area. The breached uptrend will now act as resistance, currently at 34.88. Following the warning on Friday from the hammer in the candlestick charts, the Gold-Silver ratio closed higher today at 50.4. There is resistance from the bear channel at 50.8.

Technical levels for 6^th Mar, 2012:

Metal	Support ($/oz)	Resistance ($/oz)
Gold	1,690.55	1,721.10
Silver	33.074	35.042

Economic Calendar:

Date	Economic Indicator	Country	Actual	Forecast	Previous	Effect & Remarks
5th Mar	ISM Non-Manufacturing PMI	USD	57.3	56.1	56.8	As Actual > Forecast = Good for currency. Level of a diffusion index based on surveyed purchasing managers, excluding the manufacturing industry has Increased.

Disclaimer:

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