Sharekhan Commodities Buzz dated November 21, 2006

The weak base metals and lower energy prices have capped the upside in bullion. European Central Bank (ECB) President Jean-Claude Trichet yesterday suggested the ECB might push for higher interest rates. On the other hand, a slowing US economy and easing inflation might force the Federal Reserve to maintain the status quo. In any case, this is a win-win scenario for the yellow metal. A weak greenback is supporting the yellow metal and amid the consolidation the prices are likely to move up ahead of the year-end demand. Gold should be bought on dips.

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