Richmond Fed Manufacturing Index Helps Gold Lifts Up

Bullion faced another weak trading session yesterday wherein lack of any major cues from the commodity side and continued optimism about the health of the US economy pressurized the precious metals complex. In the US, equity markets and particularly S&P 500 advanced 0.5% to close at a fresh record after IMF Managing Director Christine Lagarde said Dec 22 the organization is raising its growth outlook for US economy in 2014. This additionally weighed on the bullion complex as better economy reduces gold flavor for safe-heaven. By the end of trade, gold for most active February expiry at the Comex was down by 0.5% to $1197 an ounce whereas in the Indian markets, gold for same month’s settlement at MCX slipped 0.65% to Rs 28365 per Kg. Further higher drop in local prices was appended by moderate appreciation in the Indian Rupee. Yesterday, in the local markets, we saw the difference between the February and April contract further increasing to Rs 640 per 10 Gms as against near Rs 600 last week. We had been maintaining a bullish outlook on the spread for two-three weeks now (Buy Feb-Sell Apr) and had recommended to initiate long in the spread around Rs 450-500 levels for Targets of around Rs 700-750 levels over the short-term time frame. Overall as per the international markets cues, we continue to maintain our broad bearish bias into the commodity in the short-term to medium-term. However, our internal study based on Technical analysis is suggesting cautions trade in Intra-day due to less clarity in trading direction. We have a ranged view in the commodity today

Silver likewise gold had a weak trading session yesterday though; losses were moderately lesser as the commodity took mixed signals from the industrial metals side in the international markets. Silver for March expiry at the Comex closed 0.2% down to $19.40 per ounce wherein the Indian markets too we saw silver falling by a similar rate around 0.2% to Rs 43900 per Kg. We believe silver has a chance for enhancing its broad underperformance against gold in today’s session and feel the gold/silver ratio would see moderate increase today. While base metals continue to trade mixed, overall bearish sentiment against the precious metals space is likely to continue today as well. This when appended with the modest appreciation in Rupee could lead to higher fall in silver as equated to gold. We would advice traders to look for selling 2 lots Silver Mini and buying 1 lot Gold Mini in Intra-day trade today on dips with the anticipation of the ratio to increase. On an individual basis too, we advice selling silver on pull-backs today

Commodity Tips

SELL MENTHA OIL MCX DEC NEAR 836 SL 840.50 Tgt 827

Buy Silver Mcx Mar Near 43800 sl 43640 Tgt 44200

TODAY COMMODITY MARKET ECONOMIC EVENTS: