Market Commentary

Ø Overnight dollar strength saw gold open lower at 1540/1541. Gains in equities, after mixed housing data, coupled with a strengthening EUR encouraged gold buying with the metal reaching an intraday high of 1552/1553 midmorning. More discouraging news out of Greece however, took away gold’s optimism, with it tumbling to its intraday low of 1534/1535 midsession. A midday comeback was attempted but could not hold and the metal eventually closed the day at 1536.25/1537.25

Ø Silver opened much lower at 27.49/27.54, alongside deep overnight losses in both base metals and crude. The metal made early gains as crude rallied back, eventually reaching an intraday high of 27.96/28.01 midmorning. Following the theme of the day however, early gains were erased as commodities retreated and silver reached an intraday low of 27.15/27.20 shortly before the close at 27.21/27.26.

Technical Commentary

Ø Gold made further progress today towards reaching its target of 1522, trading to a low of 1534 and closing at 1536. Support remains at 1522 and resistance at 1579. Should gold close through the 1522 support level, the next target will be the 1478 low from July 2011. RSI is approaching extreme oversold territory but there are no warning signs yet of a change in trend.

Ø Silver also closed lower at 27.21 after breaching support from the bottom of the bearish trend channel on an intraday basis. Support is at the bottom of the channel, currently at 27.08 and resistance is at 28.83. The RSI for silver is in extreme oversold territory; however, there are no warning signs yet of a change in trend. The Gold-Silver ratio had a very strong up-day today, trading at 56.69, clearing resistance at 55.76. This should now act as support. The next target is a full retracement to the December 2011 high of 58.26.

Technical levels for 17^th May, 2012:

Metal	Support ($/oz)	Resistance ($/oz)
Gold	1 ,523.45	1 ,561.19
Silver	26.490	28.154

Economic Calendar:

Date			Economic Indicator	Country	Actual	Forecast	Previous		Effect & Remarks
	17th May	Unemployment Claims		US	Pending at 6:00pm	368K		367K	If Actual < Forecast = Good for currency. The number of individuals who filed for unemployment insurance for the first time during the past week.
	17th May	Philly Fed Manufacturing Index		US	Pending at 7:30pm	10.3		8.5	If Actual > Forecast = Good for currency. Level of a diffusion index based on surveyed manufacturers in Philadelphia.
	16th May	Building Permits		US	0.72M	0.73M		0.75M	As Actual < Forecast =Not Good for currency. Annualized number of new residential building permits issued during the previous month has Decreased.
	16th May	FOMC Meeting Minutes		US	NA	NA		NA	Several Federal Reserve policy makers said a loss of momentum in growth or increased risks to their economic outlook could warrant additional action to keep the recovery on track, minutes of their last meeting showed. Committee participants discussed the potential value and drawbacks of this type of exercise for both internal deliberations and external communications about monetary policy.

Disclaimer: -

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