Market Commentary

Ø Gold improved overnight, opening the session at 1555.50/1556.50, before dipping after tepid jobs data. Range trading early in the session until buying interest emerged after a weaker than expected Philadelphia Fed number, taking the metal to an intraday high of 1579.75/1580.75 as participants continue to speculate on the need for additional stimulus. A quiet afternoon session took us to a close of 1573.00/1574.00.

Ø Silver also improved overnight, opening at 27.61/27.66, before trading to a low of 27.49/27.54 after employment data. Buying interest as gold improved boosted the metal above 28.00 and to an intraday of 28.29/28.34. The commodity concluded the session at 28.04/28.09.

Technical Commentary

Ø The bulls staged a big counterattack today, taking gold right through its resistance line, the bottom on the previous bear channel, at 1578 on an intraday basis. Gold closed at 1574, just shy of resistance. The long, white candle is a bullish engulfing pattern, which is a reversal signal. A close above resistance at 1578 will bring in more buyers. Support is at the low of the 2-day pattern which is at 1526. In terms of the longer-term technical, the picture is still bearish so long as we remain below last week’s high at 1642.

Ø Silver had a strong bounce off the bottom of its bearish trend channel, closing at 28.04. This may be the setup for a move back towards the top of the bear channel which is still intact. Currently, the channel is defined by support at 27.00 and resistance at 30.00. A weekly close below 28.46 (last week’s low) would keep the outlook bearish. The Gold-Silver ratio is trading lower at 56.16 and traded as low as 55.75 on an intraday basis. The 76.4% Fibonacci retracement level, which is now acting as support, is at 55.76.

Technical levels for 18^th May, 2012:

Metal	Support ($/oz)	Resistance ($/oz)
Gold	1 ,548.12	1 ,589.69
Silver	27.368	28.510

Economic Calendar:

Date			Economic Indicator	Country	Actual	Forecast	Previous		Effect & Remarks
	18th May	German PPI m/m		EU	Pending at 11:30am	0.4%		0.6%	If Actual > Forecast = Good for currency. Change in the price of goods sold by manufacturers.
	17th May	Unemployment Claims		US	370K	368K		367K	As Actual >Forecast =Not Good for currency. The number of individuals who filed for unemployment insurance for the first time during the past week has Increased.
	17th May	Philly Fed Manufacturing Index		US	-5.8	10.3		8.5	As Actual < Forecast =Not Good for currency. Level of a diffusion index based on surveyed manufacturers in Philadelphia has Decreased.

Disclaimer: -

This report contains the opinion of the author, which is not to be construed as investment advices. The author, Directors, other employees of RiddiSiddhi Bullions Ltd. and its affiliates cannot be held responsible for the accuracy of the information presented herein or for the results of the positions taken based on the opinions expressed above. The above-mentioned opinions are based on the information, which is believed to be accurate, and no assurance can be given for the accuracy of the information. The author, directors and other employees and any affiliates of RSBL cannot be held responsible for any losses in trading. In no event should the content of this research report be construed as an express or an implied promise, guarantee or implication by or from RSBL that the reader or client will profit or the losses can or will be limited in any manner whatsoever. Past results are no indications of future performance. Information provided in this report is intended solely for informative purposes and is obtained from sources believed to be reliable. The information contained in this report is no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. We do not offer any sort of portfolio advisory, portfolio management or investment advisory services. The reports are only for information purpose and are not to be construed as investment advices.

Ø