Gold Cracks for Diwali

Gold In our yesterday report, we suggested a bearish view on gold on expectations that the FOMC’s dovish statement would keep the US dollar higher, which might have caused gold to decline. We believe that market has reacted accordingly and the euro fell sharply yesterday after a comment by the European Central Bank (ECB) on the economic stability and a likelihood for an interest rate cut. Eventually, the euro tumbled and gold ended the session on a lower note at $1323.70. At the local market, gold’s December futures prices settled at Rs 29773, down by 1.21% from the previous close.

This, morning gold is seen trading flat at $1324.The Asian markets are taking a slight breather at present, shorting gold futures due to anticipation that prices will be trading near the oversold levels ahead of the weekend. In the meantime, all the Asian currencies are trading weak today and so, gold prices in their respective currencies may have not fallen much, like global gold price fall. Therefore, we believe that gold might remain steady during the Asian session.

However, as we proceed, there are no major triggers expected from Europe but, the sentiment still holds for the currency, which may indirectly pull gold lower. Overall, we are still holding onto a bearish view on gold for the day. In the US hours, there are two important economic data releases expected (detailed explained in our global market analysis section), which might cause volatility in gold. With today being the last day of the week and the prices that have been falling continuously along with lower volumes and open interest, any short-covering of positions may push prices much higher. So, we still continue to hold a bearish view on gold for the day and recommend selling from the higher levels.

Silver In yesterday’s report, we cited a bearish view on silver. While we wrote our morning report at 9 AM IST, silver had already fallen by more than 2.60% in the Asian session. However, we continue to hold on to a bearish view. Therefore, more selling was noticed in silver during the European and the US session. So eventually, silver prices ended at $21.86, down by more than 4.50%. At the local markets, silver December futures ended at Rs 48,431, down by more than 3%. We could see that silver’s fall locally was relatively lesser than global silver prices due to the rupee’s depreciation.

This morning, silver is seen trading at $21.89, with no major no change from its previous close. As explained in our gold section, the Asian markets are now reluctant to sell silver. However, we continue to hold on to the bearish view on silver for the day. As we are seeing, silver has fallen the most in more than a month as the Federal Reserve fueled speculation that it may trim its stimulus in the near future. We believe that though silver is trading steady, we expect it to remain lower as the day progresses. We recommend selling from the higher levels.

Looking at the derivatives front, we expect a fall in prices along with lower volumes and open interests, which may not push price much higher should there be any short covering today ahead of the weekend. Locally, rupee has depreciated against the US dollar and so, we believe that the losses could be minimal and also recommend selling from the higher levels for the day.

COMMODITY INTRADAY TIPS

BUY GOLD ABOVE 29930 SL 29885 TGT 30000

BUY LEAD MCX NOV NEAR 135.50 SL 134.50 TGT 136.50

ECONOMIC INDICATORS:

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