Diwali Will Spark Gold and Commodity Market Tips
Gold Commodity Market has just made a swift turnaround from key support levels of $1180 and currently trading at $1235. The move was quite erratic as well as persistent. Interestingly the trading volumes has also gone up wide globally, we could possibly say $1180 was a tough support to break down or investors would have betted on the lower price. Besides, fresh development especially from the US fed minutes from the last month held meeting came as a surprise to the market making USD to decline and the Gold to go up. Now, interestingly gold investments which were all the way going down for the last several months, looks like have reached to a state where investors are finding hard to go fresh short. Therefore, we saw the SPDR gold holdings have been just rested at the bottom while a minor recovery has been noticed. We do not mean that the demand has come so fast so immediately but such changes in the number might be making a gold investor to think for a while before making any fresh selling. In the meanwhile, from Asia, India; though is not a price setter in the global market but ahead of major festival season-Diwali; some sort of sentiment is noticed that is refraining Indian investors to sell gold at this moment. What we perceive the most is, though global factors like USD as we have discussed earlier may have supported gold to rise, but we also believe for a while that global investors may be also thinking that Indian demand would go higher during such festival season. However, there are no such clue coming in from India, nor Indian government has made any relaxation in the import duty of gold. For the next week is concerned, setting up a view is like a challenge for everyone while we shall take an effort it suggesting our recommendation for the investors. We run a statistical regression and see that the performance of USD has a lot impact on the many asset classes so on gold. So, it’s imperative to understand how the USD is looking in the next week. We talk near term fundamentals or investors digesting the recent minutes may continue to pull the USD lower which might help the gold to rebound some more in the next week. However, gold as a commodity its fundamentals have not just turned positive or the US economic data releasing in the next week looking very bad. In that regard gold might see some more recovery in the prices. Another area that we emphasis on is the rising trading volume. Since, the volumes have gone up so much with higher open interests and price indicates that some more gains in the prices could be noticed. Nonetheless, we need to look at the euro performance which is anyway not looking so positive against its major counter parts. Hence, possibly the gains in gold prices might be also limited globally. Besides, the equity markets have declined a good amount in the past week and likely that some more weakness may be noticed ahead of month end expiry, might pull down the major stock prices lower. On a sloppy we could say meanwhile, some funds may move to gold as part of investment. At the local market we believe rise in the prices may not be so high in the next week while the losses may also be limited. Nonetheless, any fresh negative trigger in the market might ruin the move. Finally, we are in the impression that gold might prolong its bullish bias for few days in the next week while the overall scenario still holds down and no sign yet developed about the bullish fundamentals on the gold From the trading front and technical study depicts that view that $1250 on a daily close basis continues to be respected as a strong resistance and by any means if it breaches then the possibly it may extend its gain to $1260-1265 while thereafter it may again turn down. Likewise, if we look at the Indian front, we saw a bit of exaggeration in the prices due to Indian rupee so as discussed above and if any means Indian rupee appreciates a tad due to weaker USD, we might see correction in the local gold prices are likely. So, our strategy would be to take short from higher levels at the local market matching parity with global prices near $1245-1250, recommend selling near Rs. 27,450-27500 targeting Rs. 27200 SL above 27650
Technical Analysis: Gold Dec MCX futures prices witnessed upside movements in the last week. After witnessing a weekly high of 27610 prices are trading lower at 27234 levels. On breach and daily closing below 27070 levels may lead the drop to extend further. For short term traders we suggest selling Gold Commodity Market Weekly Levels Trend: Sideways Resistance on Upside at 27598-27940-28280 Support on downside at 26928-26599-26258 Trend Deciding Level is at 27269 Silver Commodity Market followed the overall movement in Gold commodity this week wherein it even touched four week high around the $17.82 per ounce mark. However the metal which is being treated as a mix of precious and industrial metal was plundered upon its gold related gains as base metals largely slipped heavily during the week gone by. Thus as of the latest quote of Friday evening (IST) silver Comex December is lower marginally on a week on week comparison to $17.25 while in Indian markets, silver December contract at MCX was lastly stable around Rs 38500 per Kg mark. As said in our gold write-up we are anticipating Bullion to find some positivity during the initial half of coming week however, broader negativity over the segment and the commodity should act bearish from higher levels. On that regard, our view in base metals wherein most of them are seen stable to negative might also add pressure on silver and thus calls for a case wherein the whitish metal owing to its higher beta and mercurial nature might record more losses than equated to gold commodity. On the economic cues in the coming week, there are few data variables due from US and Europe wherein the major indicator would be Chinese Q2 GDP data. This week we have already seen Chinese data disappointing over CPI and PPI. Chinese IP number along with YoY perspective on GDP would be critical with markets expectations already sober near the 7.2% mark against previous reading of 7.5%. In case the data further deteriorates from here, we could see trading sentiment being further derailed especially for the industrial commodities wherein silver is also likely to come beneath pressure. Merely aspect which could play against us is the fact that the commodity has fallen for almost every week since July and needs a good correction before solid selling pressure seeps in. We hold a sell stance in the commodity on higher levels in the coming week Technical Analysis: Silver December Commodity Mcx future prices moved in the range of 39180-28280. As of 17 October, 2014 prices closes at 38399. On the higher side prices are witnessing a stiff resistance at 39200 levels. Sustained trades below the same it is expected to remain downside. Break below 37900 could lead the drop to extend towards 37210 levels. Silver Commodity Market Weekly Levels Trend: Down Resistance on Upside at 38960-39520-40080 Support on downside at 38060-37720-37160 Trend Deciding Level is at 38620 Note: Break above 39500 may change the trend towards upside Commodity Market Tips Sell Gold Mcx Dec on rise at 27450-27500 sl 27650 Tgt 27250-27100 Sell Silver Mc Dec on rise near 38650-38700 sl 39200 Tgt 38150-37600