Cease In Greece Troubles and Commodity Trading Tips

Commodity Trading TipsGold Commodity as of major developments during the week, we continue to see negative factors affecting the metal on macroeconomic or even its consumption side. Looking at the Greece stalemate, the Finance ministers of EU region and Greece government officials finally reached a short-term consensus over the Greece government finances wherein the latter was extended the bailout funds for four months. The government however should submit a list of economic measures it will undertake this Monday.

Though still Greece issue is not completely over, markets broadly are not very much concerned even in a worst case scenario if the country leaves the EU region as recently seen from comments out of German ministers. In the current state, when problem is probably leading to at-least short-term conclusion, it might add bearish bets for gold which is seen as a hedge against economic and political uncertainty.

Onto the demand side, we are witnessing lack of physical consumption for the metal especially from major consumer China wherein the nation in going through its week long Lunar holiday. Participation in less as number of other major Asian economies too celebrate the Lunar holiday which hurt additional demand prospects for the commodity. Though ETF investments did saw stabilization, ETF Gold Holdings has become more of lagging indicators lately and most likely that if gold commodity witnesses a good fall in coming weeks, we might see drop in ETF holdings.

Nevertheless, there were some small but constructive positive steps from the local markets front for the commodity. The RBI during the week allowed Banks to import gold on a "consignment basis." Banks and trading houses will be allowed to bring in gold with no conditions attached which is expected to boost domestic buying in the coming months. Gold imports in India have remained low in last couple of months despite the GoI withdrawing the highly tightening 80-20 in November. Imports remained lower as importers and waited for more clarity wherein the latest cues should come out as a shot in the arm for local Jewellery and other gold Importers. As per Prithviraj Kothari, ED of “India Bullion and Jeweler’s Association, Gold imports may increase to 75-90 MT in coming months as against about 40 MT lately.

On a cumulative note, while China continues to lag, at least we are getting some optimistic cues developing in India, Gold world’s largest consumer. However, as we have said earlier as well, gold is once such commodity which takes major cues from macro-economic side rather than its own demand –supply matrix. On that note, ease in Greece troubles, ceasefire in Ukraine-Russia border, rising equities and largely positive US Dollar might continue to act negative pressure on the metal in coming week. We hold our selling stance in the commodity on higher levels in the coming week on gold.

Risk factor:

1) Gold saw high volatility during middle sessions last week as Gold prices also remained supported as FED Meeting minutes release showed some policymakers were in favor of holding interest rates low for longer. This change in guard from the FED officials supported the commodity to move towards its major Resistance zone around $1225-1230 per ounce on Thursday.

2) In the coming week, we have US Inflation number along with GDP though major focus would be on FED Chari Janet Yellen’s Testimony on Feb 24-25which may take the markets and Gold on a good ride on either side. While major economic indicators still point towards positive footing in the US economy, it may be possible that Yellen might not come out highly Dovish which could indirectly fuel good rally in the USDX and continue to weigh on the yellow metal. However risk would remain higher during middle sessions in the next week.

Gold Commodity Weekly Trend:

Support at 25800-25400

Resistance at 26600-26950

Trend: Down Side

Silver Commodity Trading as of major cues for the metal next week we are going to witness a number of macroeconomic events taking place in the West with host of economic data due from the US while Chinese markets which area on a week long holiday due to the Lunar New Year would come back to normal on Wednesday. While Gold commodity is largely expected to trade on a negative note backed by major developments seen on the Equity, Greece and Currency side; we believe silver might not be able to hold itself back against the broad negative pressure in the complex. On top of that, additional negative cues which hurt the commodity is subdued to mix trading in industrial metals globally. In coming week, we have the preliminary HSBC manufacturing PMI data released on Wednesday. The Chinese PMI has been in the contraction mode for a few months and is expected to further deteriorate to 49.6 thereby weighing heavily upon selective commodities and including Silver commodity backed by its consumption pattern in precious and industrial metal. Overall we hold selling stance in the whitish metal s well in the next week.

Silver Commodity Weekly Trend:

Support at 35300-34400

Resistance at 37000-37800

Trend: Down Side

Commodity Trading Tips:

Sell Gold Mcx Apr on rise near 26500-26600 sl 26950 Tgt 25950

Sell Silver Mcx Mar on rise near 37000-37100 sl 37860 Tgt 35650-35300

Sell Crude Oil Mcx Mar on rise near 3300-3320 sl 3450 Tgt 3120-3030