Two primary assets were down in the week by see review by Commodity Advisory Services half and one and half per cent consecutively; they are both USD index and the gold, an unconventional state which is seldom noticed in the financial markets. We perceive this as a sort of risk off scenario wherein other FX markets were mixed; euro moved higher, the Japanese Yen continued its own bearish path.
From the fundamental aspects of gold we do not see any interest in demand coming in which definitely is likely to keep the gold prices lower. However, we had seen some sort of price recovery earlier weeks but the principal outlook still holds down.
From the investment front, the gold holdings at the SPDR gold trust are just maintaining its south journey and as of 26th November the total holdings were mere 718 tons. We believe as long as the investment demand is not popping up we would not see any positive sense in the prices. So, we continue to sell the precious metal for the next week.
Besides, it’s imperative to talk about gold and USD relationship especially when we have key economic numbers from the country next week. Generally, it is observed that during non-farm payroll numbers are out in the US along with unemployment rate we see a huge volatility in the gold asset. Certainly, we are likely to see the same in the next week too. However, the only concern that we have is the week gone by data released from the US have been either mixed or little disappointing so if the same scenario holds then possibly the unemployment rate may stay at the same state at 5.80% with a little retreat in the employment. However, we do not see at least in the next week to have significant positive impact on the gold prices as the inherent scenario still holds down. With this we still continue to hold our bearish bet on gold in the next week.
Another scenario that we are able to perceive is the global equities are relentlessly trading higher so most of the investors’ money is being parked in the equity market. Hence, the interest in trading the precious metal is slowly fading which may keep the commodity gold prices lower.
Lastly, as discussed above about the misalignment relationship between gold and USD, we would like to reiterate again that though USD index has declined a tad but the US equities have again outperformed. This implies us the fact that it’s the FX play that is being played between the major currencies- USD, GBP, Euro and JPY. So as long as the mixed performance in the currency takes place we shall continue to hold the view that both gold and USD could take a unilateral move.
Overall, we hold a bearish outlook on gold globally while locally we see that more selling could be noticed in gold prices due to slight appreciation in the Indian rupee pertaining to likely weakness in the USD.
Note: Volatility may be higher as we have monthly Employment numbers from the US whereas locally the RBI Monetary policy meeting would be watched. Traders note that increase in monthly Gold/Silver imports in India have raised speculation that GoI and RBI might take some action against limiting Imports. Rumors going around the corner about probable change in the so called 80:20 rule and also import duty could create some mercurial movements in the markets. We believe, if Imports continue to rise in coming months, there is a chance for fresh tightening however don’t expect any major changes in policy in very short-term
Gold Feb MCX futures prices witnessed downfall in the last week. As of 28 November, 2014 prices are trading at 26402, down by -1.35 from the previous week close. Prices are expected to trade downside and we suggest selling at higher levels
Gold Commodity Trading Weekly Trend: Down
Major Support on down side at 25700-25350
Major Resistance on Upper side at 26550-26960
As the yellow metal slid, Silver was not far behind wherein the high beat nature of the commodity pushed it even lower. As per last quote on Friday evening IST, Silver Comex for active March expiry was lower by around 2.5% to $16 per ounce while Indian MCX Silver for same month’s settlement too shut shop lower by 1.6% down to Rs 36435 per Kg during the week.
Moderate depreciation in INR and local adjustment with respect to spot rates as Dec contract was expiring could be possible reasons for the outperformance of silver commodity locally as against the movement in Comex. Amongst major cues during the last week, the so called OPEC meeting wherein group left the production quote unchanged to 30 MBPD pushed global oil prices sharply lower with slump in major international benchmarks seen to the tune of 10% in a single week and indirectly hurt investment demand for Bullion. Lower persistent oil prices make a case for subdued inflationary scenario and act against investment pattern for Bullion. In the current week, once again we saw EU YoY CPI number staying subdued and putting negative case for Bullion. Also, Silver which takes cues from both Precious and Industrial metal cues probably lost at a higher rate as LMEX Index slipped more than 2% this week with the worst performer amongst base metals was Copper. In the coming week too, we have PMI numbers to be released wherein Chinese and EU numbers would be closely watched as preliminary numbers for the region were disappointing. Extended weakness over there is likely to add more pressure on the whitish metal. Cumulating the factors affecting Gold and industrial metals, we continue to hold negative bias in the commodity in the coming week and advice trader build short positions on small pullback.
Note: Volatility may be higher as we have monthly Employment numbers from the US whereas locally the RBI Monetary policy meeting would be watched. Traders note that increase in monthly Gold/Silver imports in India have raised speculation that GoI and RBI might take some action against limiting Imports. Rumors going around the corner about probable change in the so called 80:20 rule and also import duty could create some mercurial movement in the markets. We believe, if Imports continue to rise in coming months, there is a chance for fresh tightening however don’t expect any major changes in policy in very short-term
Silver March MCX futures prices traded downside in the last week. As of 28 November, 2014 prices are trading at 36130, down by -2.4% from the previous week close. Prices are expected to continue the same trend for the week ahead. For short term traders we suggest selling at higher levels
Silver Commodity Trading Weekly Trend: Down
Major Support on down side at 34400-33600
Major Resistance on Upper side at 36100-36900
Weekly Tips by Commodity Advisory Services
Sell Gold Mcx Feb on rise at 26500 sl 26750 Tgt 26200-25750
Sell Silver Mcx Mar on rise near 36450 sl 37200 Tgt 35400-34800
Indian Intraday Trading shares rose for the second consecutive session on Monday, led by metals and mining firms such as Tata Steel on expectations the government would pass executive orders to ease land acquisition rules and auction minerals such as iron ore. The Bombay Stock Exchange Sensex closes at 27396 were nick up by 154 points or blow up by 0.57 percent. Nse Nifty Closes at 8247 were healing up by 46 points or plant slide up by 0.56 percent. The BSE Mid-cap index gained 0.4 Percent and Small-cap index ended up flat with positive bias in today intraday trading.
