Tag Archives: commodities

Bullion to remain under pressure, sell on rise: Emkay

19 Jun

In an interview to CNBC-TV18, Ashok Mittal, CEO of Emkay Commodities spoke about the current trend in commodities market.

Below is a verbatim transcript of the interview:

Q: How would you approach bullion going into that Federal Open Market Committee (FOMC) meet today?

A: We are expecting that there will be a lot of pressure on bullion prices , although they have moved up little bit in the last few sessions largely in India because of the weakening of rupee. We think that USD 1400 per ounce remains a strong resistance for gold. Hence we are recommending to sell it at any upside towards USD 1375-1385 per ounce. We expect gold to come back around USD 1320 per ounce or so. Once USD 1320 per ounce breaks then we can expect further downside.

In the Indian market, Rs 28,100-28,200 per 10gm is a selling level and we expect it to come back to Rs 27,500 per 10gm and maybe lower than that.

People will be looking at what Ben Bernanke says because although we do not expect them to say that this USD 85 billion bond buying will be stopped but they might put some kind of conditions on that. If there is any kind of condition then obviously there will be further pressure on bullion prices. So overall the prices will remain under pressure.

Similarly, for silver also we think that USD 22 per ounce is a resistance and we can sell there and we expect silver prices to fall back.

In rupee terms we expect silver prices to fall somewhere around Rs 42,500-42,800 per kilogram range. So we should sell both gold and silver on the uptick.

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Q: There seems to be reports that money is flowing back into crude now as an asset class, how would you trade that particular commodity and at what kind of targets?

A: We expect that the broader long-term range for nymex crude oil will be somewhere around USD 80-100 per barrel approximately. We are on the higher band on that technically. We expect that around USD 100 per barrel Nymex crude should get strong resistance .

Today the data will be out and we expect that inventories will be lesser, we cannot see some kind of uptick happening. But overall inventory levels are quite high and right now the tension in Syria is something which is driving the prices on the higher side. Economic outlook is changing drastically, where we see a lot of demand coming in. There is a lot of supply available and there is no such thing that Organization of Petroleum Exporting Countries (OPEC) will cut down on the production side as well.

So our idea is that for short-term we might see some uptick happening but we do expect that crude oil prices also will not be rising too much and we can sell them maybe at some uptick when we see today’s data and we expect that Nymex crude should come back to around USD 95-94 per barrel.

What would move Gold, Silver today

30 May

Two key data releases are awaited for the day and yes, it is from US. Both releases—US GDP QoQ and initial jobless claims—are scheduled for around 07.00 PM IST.

The US GDP is forecast to have grown by 2.5% in the first quarter of this year (January-March). If the reading turns out to be a positive surprise i.e. to the upside, it would strengthen US Dollar and thereby weaken bullion prices.

The other data release scheduled for the evening for 7.00 PM IST is US Initial Jobless Claims. The data measures the number of people who have applied for unemployment insurance for the first time during the past week.

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If the data released exceeds the forecast of 3,40,000 in numbers, then it would give a fillip to dollar and weaken the precious metals gold and silver.

Besides, the data would also be tracked by US Federal Reserve’s FOMC (Federal Open Market Committee) as the debate on whether or not to continue with QE measures rages on.

The FOMC, responsible for initiating Quantitative Easing measures that involves bond-buying to the tune of $85 billion a month, has tethered the termination of the program to job market recovery and healthy inflation.

Both gold and silver have been plagued by correction and are entrapped in a stalemate condition ever since news arrived that George Soros has liquidated his holdings in SPDR Gold Trust, world’s biggest ETF of gold. While physical demand of gold has picked up recently, it has failed to buoy prices beyond a point.

“Physical buyers have helped to limit declines but they have also become more price-sensitive and tend to stay on the sidelines near $1,400,” said Yang Shandan, a senior trader at Cinda Futures Co., in China to Bloomberg.

Total holdings in ETPs have dipped to the lowest level since June 2011, shrinking by 5.4 percent this month, according to data compiled by Bloomberg.

Barclays notes:

“Market sentiment remains negative towards gold with non-commercial Comex gold positions at their lowest since December 2008 and ETP outflows showing little sign of slowing down. Net redemptions have hit 94 tons in May thus far (as of Saturday), and once again negative interest is skewed towards the US listed products, with GLD down 58 tons and at its lowest since February 2009.

On a regional basis, US listed products have suffered the largest outflows of 341 tons for the year to date, followed by UK primary listed products at 48 tons and the Swiss listed products at 47 tons. Metal held in trust across the 55 physically backed products we track are now at their lowest since July 2011 with year-to-date outflows of 443 tons, almost the equivalent of the net inflows over the past two years (476 tons).”

Gold on the Comex for delivery on August 13 was seen trading at $1,394.25/oz, a gain of $2.45 or 0.18% as of 10.39 AM IST. Silver on the Comex for delivery on July 13 was seen trading at $22.433/oz, a loss of $0.020 or 0.09%.

Commodity Sources