Mcx India Commodity Weekly Outlook 13-18 May’2013

BULLION:

This week is going to be crucial for gold due to the major economic releases from the euro zone and US. The CFTC longs have also increased by 4.35% which states that the long positions are more than short positions which are 4.13% should limit the downside trend in this week. On the other hand, the euro zone is likely to witness economic weakness as the first quarter GDP should decline which would pressurize the gold prices on the back of weakening of the euro against the US dollar. The euro-zone’s finance ministers meet on the first two days of the week for discussing Slovenia’s macroeconomic imbalances and implementation of bailout loans to Ireland and Portugal would extend some gains in the gold prices. We anticipate the euro zone finance ministers meet to relieve the weakness, which would pressurize the gold prices. German wholesale price and consumer price is likely to decline which would again pressurize gold. All through the US, the House of Representatives would keep an eye on the farm bill and budget cuts, we deem this would continue to weaken the investor sentiments which would pressurize gold prices on the back of strong US dollar. Next to the middle of the week, the treasury inflows in the form of net long term TIC is likely to increase with rising US bond yields. Higher treasury inflows and a rising dollar should continue to pressurize the gold prices. Markets should eye housing releases and consumer prices. Feeble import and producer prices along with slowing consumption should keep consumer prices to decline which would weigh down the gold prices. The dollar is likely to stay under pressure originally; though, continuous spending cuts and increasing treasury inflows should continue to add gains in the dollar index against the major currencies and extend the downside in gold prices.

This Week, Silver is predictable to remain weak. Euro zone industrial production is likely to increase which would support silver prices to trade up however the first quarter GDP is expected to decline which would pressurize the silver prices on the back of weakening of the shared currency. The German wholesale prices as well as consumer prices should contract in April due to slowing consumption and weak manufacturing. This might limit the silver prices to rise. The euro-zone’s industrial production and inflation should also remain weak amidst slowing consumption and would further pressurize silver prices in this week. In general, we recommend remaining on the selling side for this week.

Gold Weekly Outlook:

Projected High range for the Week: 27117-27441

Projected Low range for the Week: 27028-26704

Weekly Major Resistance on Upside: 27294-27588-27882

Weekly Major Support on Downside: 26646-26292-25998

Weekly Trend Deciding Point @ 26940

Silver Weekly Outlook:

Projected High range for the Week: 45345-46069

Projected Low range for the Week: 45187-44463

Weekly Major Resistance on Upside: 45734-46405-47076

Weekly Major Support on Downside: 44286-43509-42838

Weekly Trend Deciding Point @ 44957

BASE METALS:

This week is likely to support the rising optimism over the recent economic developments around the globe. Placement the groups of seven nations meet over the weekend we expect the loose monetary policy should remain for the time being and would keep the investor’s sentiments high. On the other hand, markets should keenly eye the euro-zone finance minister’s meet on the first two working days of the week. The euro-zone finance ministers would sanction the bailout package to the ailing peripheral economies and should also discuss on the formation of banking union. We deem, this should support optimism limiting the harsh impact of euro-zone crisis and should support gains in riskier assets including base metals. The Chinese industrial production and retail sales should also remain higher on Monday and should support gains in metals. Seeing that this week progresses, economic weakness in Europe is likely to be confirmed with the contracting first quarter GDP. The German GDP is also probable to grow at a slower pace and should continue to indicate weak manufacturing activity and should weaken base metals by the mid of the week. This week, the US senate is also likely to pass the bill for additional spending cuts worth of $23 billion over a decade. A House panel on May 15 is drafting its own version with $38 billion in spending cuts and we believe this should continue to weaken the investor’s sentiment in future and should remain supportive for dollar limiting gains in base metals at the LME. The US TIC flows should also increase as recently the US 10 years bond yields have remained higher and gained 1.60% last week. Therefore, although we anticipate the housing releases in the form of NAHB house price, building permits and housing start to improve at a slower pace still the gains in base metals might not be supported on the back of higher US dollar. In general we expect base metals to remain positive at the beginning of the week; On the other hand prices should remain under pressure as the week progresses amidst weak euro-zone GDP releases and concerns of US budget cuts. At our domestic front, the rupee is likely to remain slightly weak similar to this week and this should limit the downside of base metals prices at the MCX. Unlike copper, we anticipate the weakness to continue in metals like aluminum and zinc amidst falling euro-zone car registrations and weak manufacturing.

Copper Weekly Outlook:

Projected High range for the Week: 411-421

Projected Low range for the Week: 402-393

Weekly Major Resistance on Upside: 418-424-430

Weekly Major Support on Downside: 399-387-380

Weekly Trend Deciding Point @ 405

ENERGY:

MCX Crude Oil May as seen in the weekly chart above opened at 5166 and trade with mixed note making a high of 5285 and a low of 5136.Towards end of the week, strong buying emerged at lower levels pushed prices higher to close the week at 5250, up 2.10% from previous week.

Crude Weekly Outlook:

Projected High range for the Week: 5269-5343

Projected Low range for the Week: 5227-5153

Weekly Major Resistance on Upside: 5313-5374-5434

Weekly Major Support on Downside: 5164-5076-5015

Weekly Trend Deciding Point @ 5225

MCX WEEKLY TECHNICAL RECOMMENDATIONS:

BUY GOLD MCX JUN NEAR 26650-26600 SL 26350 TGT 26950-27050

BUY SILVERMCX JULY NEAR 44600-44500 SL 43500 TGT 45700-46150

BUY COPPER MCX JUNE NEAR 404-402 SL 394 TGT 414-418

BUY CRUDE OIL MCX MAY NEAR 5225-5200 SL 5130 TGT 5320-5330

SELL MENTHA OIL MCX APR BELOW 1052 SL 1068 TARGET 1036-1024