BULLION:
This week too is going to be interesting for Gold, Particularly since there are only four in the global markets while the MCX has a mere three and a half working days. The ETF performance (total net asset value tonnes in the SPDR) has again drifted down by around 1% from 1233 tonnes to 1221.25 tonnes in the previous week.
We Can See that demand is still sluggish on a weekly basis and investors are still reluctant to invest in gold and gold-related products, which is suggestive of a weakness in gold prices being very likely in the near term. However, we saw slight improvement in ETF demand during the week which eventually dropped. This would most likely continue to weigh on gold prices, causing them to remain weak in the next week too. Some hopes from ETFs have fallen. We expected the safe haven appeal of gold to play a major role in the trend in gold prices. This has perhaps kept prices marginally higher, following expectation that the same petition would hold in the near term, particularly when the global economic situation still looks vacillating. On the other side, looking at the macro economic situation, the euro is expected to continue its bearishness owing to the Cyprus development.
The economic data releases from Europe are also expected to turn negative, observance the euro under pressure. The economic numbers from US are likely to be more positive for the US. This may have added further weakness to gold too. On the whole, the next week is expected to be crucial as well as interesting for gold. From the domestic end, we expect the rupee to depreciate, causing gold at the MCX gold to rise further. On the technical front, the markets failed to breach $1620 mark last week, which can be a major another major anxiety. If this hurdle still not cleared in this week, gold prices might fall towards the key support of $1585. For this week, we expect gold to trade in the range of $1585 to $1620.
Silver this week, we expect prices to remain lower, anticipating that the euro may further decline. The Cyprus development may add continued pressure to the euro which could have a negative impact on silver too. Economic data from the euro-zone is also expected to trade down, further pressurizing to silver prices. While we look at the data from US, a few key data that are expected to support the US economy may provide a slight respite to falling silver prices. Generally, we expect traders to remain cautious in silver while a sell strategy can be developed. We are expecting gold to trade higher in the next week and silver might drift down, we anticipate a good result from the gold/silver ratio strategy.
Gold prices to find Support in around 29440 levels. Trading consistently below 29440 levels would lead towards the strong support at 29100 levels and then 28700. Major support is at 28000
Resistance is now observed around 30050 levels. Trading consistently above 30050 levels would lead towards the strong resistance at 30300 levels. Major resistance is at 31000 levels.
Silver prices to find Support in around 53500 levels. Trading consistently below 53500 levels would lead towards the strong support at 52000 levels. Major support is at 50000
Resistance is now observed around 56450 levels. Trading consistently above 56450 levels would lead towards the strong resistance at 57500 levels. Major resistance is at 61000 levels.
BASE METALS:
This week, we expect metal fundamentals to play a dominant role compared to economic developments. Copper is an premium metal in China jumped to the highest level in more than a year after companies shipped metal to warehouses in Malaysia due to incentives offered by the warehouses. Buyers are paying an additional fee of $60 to $90 a metric ton for the metal in Shanghai, the most since February last year and more than $55 to $80 two weeks ago, according to Wan Ling, a Beijing-based manager for China’s non-ferrous metals association. We expect the destocking from China to continue, which should increase copper supply and offset gains in the coming week. The future premiums (amount paid in excess of LME prices to secure delivery) has increased for zinc in Europe by 5% to 8% from $100-120/ton to $105-130/ton, indicating tightness in the supply while that of lead declined by more than 19% from $90/ton in January to $72.5/ton, indicating falling demand. European traders are not interested in procuring the dull metal as the demand for batteries has remained weak with falling car sales. Therefore, selling lead and buying zinc should be the best strategy for this week. From the economic data front, the Asian releases are likely to remain mixed with higher Japanese industrial production and housing numbers. However, retail sales and small business confidence should remain weak. Chinese industrial profits should also increase due to higher consumer inflation compared to that of producers and should also support gains in base metals as Chinese industries consume more than 40% of all base metals. However the economic releases from Europe are likely to remain weak with contracting UK GDP and weak euro-zone confidence numbers which should cap the gains in metals. The M3 money supply should also fall after the ECB’s recent LTRO recall. These factors should limit any gains in metals. The markets should also keep an eye on the US GDP for the fourth quarter next week. The US GDP, along with personal income and spending are likely to increase, which should continue to support higher demand for base metals. The US manufacturing indexes are likely to remain mixed. On the domestic front, the Indian current account and fiscal deficit is likely to widen, which should limit the rupee and support gains in dollar denominated base metals.
Copper prices to find Support in around 410-412 levels. Trading consistently below 410 levels would lead towards the strong support at 400-402 levels. Major support is at 390.
Resistance is now observed around 425 levels. Trading consistently above 425 levels would lead towards the strong resistance at 432 levels. Major resistance is at 450 levels.
ENERGY:
This week will begin with development of the Cyprus bailout, as the deadline set by the ECB is on Monday. We expect the euro to recover following anticipation of Cyprus’ perusal of the new rescue plan. This may cause oil prices to continue 22 Mar’2013 Friday’s gain. Subsequently, the global market will be eyeing developments from the BRIC summit on 27-28 March. The major aim of this summit is to increase trade activities between the members by forming a development bank. India and China, the two major oil consuming nations are likely to increase their trade with Russia, the second largest energy supplier in the world. The new deal between China and Russia has come out with an agreement with Rosneft that will boost supply to China by 8 million metric tons. This indicates that demand from China is increasing. On the other side, according to the US Energy department, oil production will outpace imports by 2 million barrels per day by 2014. Increasing domestic production ahead of the lean season demand might limit gains in oil prices.
As of the economic data front, the most important releases are likely to be the US GDP along with personal income and spending. The annualized GDP is likely to increase by half a percent, with higher income and spending in the month of February.
Durable goods orders of the nation are also expected to increase along with a mixed outlook for the manufacturing sector. T
The industrial profit of China is also expected to increase, whereas Japan may post a higher retail sales number.
In general, the economic releases from the major oil consumers may show an improving economic picture to support oil prices to gain in this week. Still, concerns related to the Cyprus bailout and Italy’s government formation may limit gains in prices on account of sluggishness in the euro. Nearly everyone importantly, we expect the rupee to depreciate as the current account deficit may widen further with a higher fiscal deficit. The depreciation of the rupee may be an advantage for MCX traders.
Crude Oil prices to find Support around 5025 levels. Trading consistently below 5025 levels would lead towards the strong support at 4975 levels. Major support is at 4900
Minor resistance is at 5115. Trading consistently above 5115 would lead towards 5160 levels and then towards strong resistance at 5200. Major resistance is at 5300 levels.
MCX WEEKLY TECHNICAL RECOMMENDATIONS:
BUY GOLD MCX APR AROUND 29450-29500 SL 29100 TGT 29750-29980
BUY COPPER MCX APR AROUND 411-413 SL 402 TGT 424-430
BUY CRUDE OILMCX APR ABOVE 5140 SL 5030 TGT 5220-5280