Weekly Commodity Report
WEEKLY COMMODITY TECHNICAL REPORT 07 APRIL TO 11 APRIL 2014
Gold rises over 1 pct on short-covering after U.S. payroll data:
Gold rose more than 1 percent on Friday, its biggest daily gain in nearly a month, after data showing brisk U.S. employment growth in March unleashed heavy short-covering by bullion investors who had feared the job figures would sharply exceed Wall Street’s expectations. In a brisk turnaround from heavy selling in the days before the release of the data, prices were up 1 percent for the week, the first increase in three weeks.
The Labor Department said U.S. nonfarm payrolls increased by 192,000 jobs last month, slightly below economists’ estimate of 200,000. Some in the bullion market had expected an even stronger jobs report. Everyone had been saying the job number was going to be so much better, but the economy didn’t improve the way investors had expected, and that’s why the short-sellers are covering their positions.
The figure eased fears of an early interest rate increase by the Federal Reserve, lifting assets particularly sensitive to interest rate changes such as gold and U.S. Treasury bonds. U.S. COMEX gold futures for June delivery settled up $18.90 at $1,303.50 an ounce. Turnover was not particularly strong, however, with volume at 130,000 lots, about 30 percent below the 30-day average of 200,000 contracts.
Ukraine’s energy sector transformation and new investment:
There is only one certainty in Ukraine: The energy sector must and will be transformed, and how long this takes will depend on who ends up in the driver’s seat and how serious they are about becoming a part of Europe and reducing dependence on Russia. But by then, investors will have missed the boat.
The driving factor for any energy investor in Ukraine is the pricing environment. There is nowhere else in Europe—or some would even argue in the world—where you are going to get significant access to resources and potential resources for the price. Gas is selling at $13.66/Mcf, while it costs $4-$5 to produce and operate. That means producers are netting anywhere between $8 and $9/Mcf.
Whether it likes it or not, kicking and screaming, Ukraine will have to transform its energy sector, if it hopes to see promised IMF money. Kiev will have to start selling off assets and making the industry much more transparent. Greater transparency coupled with an already-favorable gas price environment, will make Ukraine one of the best places to be over the next 5-7 years.
Base metals to trade on a mixed note in April on weak manufacturing data:
Base metals are expected to trade on a mixed note in April on the back of weak manufacturing data from the biggest consumer, China and USA. Also, mixed manufacturing data from the Euro Zone and weak manufacturing and construction data from the UK will exert downside pressure on prices. Also, economic growth in the China which has led to increase in concerns over the demand for the metals will act as a negative factor. With strong demand side fundamentals for Nickel, prices will trade on a positive note taking cues from the supply crunch that will finally hit the biggest consumer, China as stockpiles will be put to use. Also, concerns of supply disruption from Indonesia and Russia will continue to add upside to prices.
Copper prices will also change course given the shutdown of mines and earthquake concerns in the world biggest producer, Chile that will give rise to supply disruptions. Also, China is expected to add monetary stimulus to support growth in the shattering economy, thereby brightening prospects for the red metal. Aluminium prices are also expected to cushion sharp downside or even reversal given the capacity cuts in the US biggest mine, Alcoa. On the domestic bourses, appreciation in the Rupee will exert downside pressure on the base metals prices.
MCX GOLD Technical Trend:
MCX GOLD last week rebounded from its deeper support levels towards 23.6% retracement. Now, on higher side if it maintains above 28500 then next resistance is seen around 38.2% retracement i.e. 28900. On other hand if it sustains at lower levels and trades below 28000 then bearishness may take it towards the support range of 27750-27500.
Better strategy in MCX GOLD is to buy above 28500 for the target of 29000 with stop loss of 27900.
SILVER Technical Trend:
MCX SILVER showed sideways movement on daily charts and made four consecutive higher highs sessions which indicates weakness is still prevailing in it. Now, if it sustain below 42400 then next support will be seen around 40500. On higher side 44000 will act as important resistance level maintaining above which may lead it towards the next resistance level of 45000.
Better strategy in MCX SILVER at this point of time is to sell below 42400 for targets of 41000-40500, with stop loss of 44000.
MCX CRUDE OIL Technical Trend:
MCX Crude oil last week showed sideways movement, unable to close below 5950 and took resistance of 6150. If the downward movements continues then it may find support in the range of 5900-5950. On other hand if global cues supports then strength can be seen if it sustains and close above 6150 then it may lead towards 6330.
Better strategy in MCX CRUDEOIL is to buy above 6150 for the target of 6300, with stop loss of 5950.
MCX COPPER Technical Trend:
MCX Copper on daily charts witnessed consolidation phase and unable to close above its important resistance i.e. 408. Now, if it maintains above 410 then only some correction may be seen on higher side upto the resistance level of 420. On other hand if it trades below the support level of 400 then further bearishness can be seen which may drag it towards the next support level of 392-385.
Better strategy in MCX COPPER is to sell on highs, with stop loss of 412 for the targets of 392-385