Monday, 20 October 2014

Weekly Update on Bullion, Energy and Base Metal














News Roundup



Gold futures ended Friday's session modestly lower as market sentiment stabilized, although prices still posted a weekly gain as concerns over the global economic outlook boosted safe-haven demand. U.S. and European stock markets rallied on Friday, following steep losses and massive intraday swings over the past five days, sparked by concerns about global economic weakness and fears over the spread of Ebola. Meanwhile, investors continued to speculate over the timing of a rate hike in the U.S. after a report showed that the University of Michigan’s consumer sentiment index unexpectedly rose to 86.4 in October, the most since July 2007. Another report showed that housing starts rose more than expected last month, bolstering the outlook for the sector. Gold prices rallied to a five-week high on Wednesday amid speculation weaker than expected global economic growth and its effect on the U.S. economy may lead the Federal Reserve to push back interest-rate increases. A delay in raising interest rates would be seen as bullish for gold, as it decreases the relative cost of holding on to the metal, which doesn't offer investors any similar guaranteed payout.  The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, ended the week down 0.7% at 85.31.  Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies. Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers increased their bullish bets in gold futures in the week ending October 14. Net longs totaled 51,994 contracts, up 28.3% from net longs of 37,275 while net silver shorts totaled 9,089 contracts as of last week, compared to net shorts of 7,071 contracts in the preceding week.

Crude oil futures ended Friday's session modestly higher, as investors returned to the market to seek cheap valuations in wake of recent losses and to close out bets on lower prices. Crude oil futures sank to multi-month lows on Thursday as concerns over the global economic outlook and the impact on future demand prospects dampened the appeal of the commodity. Indications that the Organization of the Petroleum Exporting Countries will not cut output to support oil markets have weighed on prices. Kuwait lowered official selling prices to Asian buyers in an effort to retain its market share last week, following similar moves from core OPEC members Saudi Arabia, Iraq and Iran. Oil ministers from the 12-member group are scheduled to meet in Vienna on November 27 to consider whether to adjust their production target of 30 million barrels per day for early 2015. Global supplies have far outpaced demand in recent months. A report earlier in the month showed that OPEC oil output hit a two-year high of 31 million barrels per day in September, led by higher production from Iraq and Libya. Some market analysts believe that only a cut in output by the oil cartel will halt the decline in prices. Oil traders are looking ahead to a raft of Chinese economic data later this week, including reports on third quarter gross domestic product, as well as data on industrial production and retail sales. The U.S. and China are the world’s two largest oil consuming nations. According to CFTC, Net longs totaled 176,671 contracts as of last week, down 8.1% from net longs of 192,208 in the preceding week.

U.S. natural gas futures slumped to an 11-month low on Friday, as investors bet that mild weather will dampen early-winter demand for the heating fuel.  Investors continued to digest Thursday's weekly inventory data, which showed that natural gas storage in the U.S. rose by a more than expected 94 billion cubic feet last week. Inventories rose by 79 billion cubic feet in the same week a year earlier, while the five-year average change is a build of 78 billion cubic feet. Total U.S. natural gas storage stood at 3.299 trillion cubic feet as of last week, narrowing the deficit to the five-year average to 9.9% from a record 54.7% at the end of March. The Energy Information Administration's next storage report is slated for release on Thursday, October 23, with analysts expecting a build in the range of 95 to 98 billion cubic feet for the week ending October 17. Net longs totaled 2,653 contracts as of last week, down from net longs of 6,288 in the previous week. In the week ahead, investors will be awaiting U.S. data on consumer price inflation and new home sales for fresh signals on the strength of the economic recovery.



Gold


Last week, we have seen high volatility in Gold though traded with positive bias. Gold rallied as festive demand arise in India and this trend remain continue in this week too. Above 27050 our target was 27200---27400---27550. It made a high of 27550 and finally settled at 27256 also closed above 21DEMA and 55DEMA which is at 27078 and 27240 respectively.

This week, Gold has support at 27050---26900 and resistance at 27650. Still looks positive and could test its resistance level of 27650 mark. Two consecutive closes above 27650 will see further upside rally till 27900---28200+ level in days to come. Fresh selling can initiate only weekly close below 26900 mark. Traders can buy Gold in panic around 27150---27050 with strict stop loss of 27050 on closing basis for the initial target of 27650.



Silver


Last week, we have seen range bound trading in Silver too though traded with negative bias and settled at 38399 also closed below 21DEMA and 55DEMA is at 39125 and 40625 respectively.

This week, Silver has support at 37700---37200 and resistance at 39200. In silver will expect range bound trading in this week again. Either side break or close with volume on weekly basis will decide further. Close below 38200 will take to 37700---37200 mark. Weekly close below 37200 will see further panic till 36000---35000 mark in days to come else it could test its resistance level of 39200 and then to 39600---40000 again. Overall trend still looks weak in Silver and any sharp rise will be selling opportunity but trade with levels only


Crude oil


As expected, Crude oil crashed vertically and made a low of 4944. We recommended selling below 5520 and 5130 level and settled at 5095 also closed below 21DEMA and 55DEMA which is at 5404 and 5639 respectively.

This week, Crude oil has support at 5000---4930 and resistance at 5250. Crude oil already crashed more than 900 points in just three weeks and will expect dead cat bounce from lower levels. On Nymex division, Crude oil has major support at $78 and unlikely to breach its support. Two consecutive closes above 5250 will see further upside rally till 5400---5500+ mark in days to come. Traders can buy and accumulate Crude oil in panic around 5000 with stop loss of $78 INR 4930 for the initial target of 5250.


Natural Gas


Last week, we have seen high volatility in Natural Gas too though traded with negative bias. It made a low of 228.30 settled at 230.90 also closed below 21DEMA and 55DEMA which is at 239.90 and 241.20 respectively.

This week, Natural gas has support at 228 and resistance at 234. Two consecutive closes below 228 will take to 225---222 and then to 219 mark in days to come else it could test its resistance level of 234 again. Two consecutive closes above 234 will see further upside rally till 239---244+ mark. Overall trend looks choppy in Natural gas and has no clear direction. So traders can trade in a range with strict stop loss and wait for conformation. 


Copper


Choppy session continues though traded with negative bias. We recommended selling in Copper around 417—419 with stop loss above 423 on closing basis. It made a high of 423.35 but unable to close and crashed vertically to 404.50 and finally settled 409.25 also closed below 21DEMA and 55DEMA which is at 415 and 429.15 respectively.

This week, Copper has support at 404 and resistance at 415. Still looks weak and could test its support. Two consecutive closes below 404 will see further panic till 400---397 mark in days to come else it could test its resistance again. Further upside rally seen only close above 415. Close above 415 will see further upside rally till 419---423 mark. Traders holding short as per our level can book part profit and revise stop loss above 415 on closing basis. Others can trade with levels only.


Nickel


Last week, Nickel crashed and made a low of 949.50. We recommended selling below 1030 level and settled at 960.80 also closed below 21DEMA and 55DEMA which is at 1022.90 and 1071 respectively.

This week, Nickel has support at 950 and resistance at 985. Two consecutive closes below 950 will take to 925---910 mark in days to come else it could test its resistance again. Fresh buying can initial only weekly close above 985 mark. Traders holding short as per our level can book part profit and revise stop loss above 985 on closing basis. Others can trade with levels only.


Pivot Levels


Symbol
Contract
R1
R2
Pivot
S1
S2







GOLD
03OCT2014
27597
27938.7
27268
26927.3
26598.7
SILVER
05DEC2014
38959
39520
38619
38059
37720
CRUDEOIL
19OCT2014
5267
5439
5105
4933
4771
NATURALGAS
25SEP2014
240
249
234.3
225
219
COPPER
28NOV2014
420
431.20
412.4
401.40
393.50
NICKEL
30SEP2014
1001
1043
975.7
934.60
908.40
LEAD
30SEP2014
127.50
130.90
124.4
121.05
117.90
ZINC
30SEP2014
143
147.90
139.4
134.40
130.90
ALUMINIUM
30SEP2014
122.05
123.90
119.2
117.30
114.50


Weekly Currency Outlook



USDINR
Buy strategy given above 61.55 was successful with pair hit both target of 61.80 and hit 62.11 just near to second target of 61.15. However pair didn’t hold the gain and settled almost flat. The weekly price action resulted in the formation of an inverted hammer candle stick which is indicating for temporary correction as underlying trend is still bullish. Hence buy on dips is recommended.

Dollar index settled at 85.1970 down by 84% on hope Fed not to end stimulus. This week, possible pullback towards 85.50-85.80 levels could be expected from the support of 84.20 or 83.80 levels as underlying trend is still bullish.
Recommendation
Buy USDINR on dips at 61.20-61.30 target 61.70-62.10 stop loss 61.05.
Important factor/data:
Core CPI m/m on 2nd Oct.
Recommendation
Buy USDINR on dips at 61.20-61.30 target 61.70-62.10 stop loss 61.05.
Important factor/data:
U.S. Core CPI m/m on 22nd Oct.

EURINR
EURINR remained volatile as was expected and after hitting a high of 79.41 settled at 78.80 levels. Sell strategy given below 77.60 was not initiated as EURINR continue to trade above 77.70.  Since August 2014 the pair has witnessed more than 6.22% drastic fall. This week, EURINR may show pullback towards 79.60 and above following to the morning doji candle stick formation. On the other hand, same situation could be expected in EURUSD and will expect to test $1.2850-$1.2950 before the fresh selling.
Recommendation
Buy on dip till 78.10-78.20 targets 78.80-79.15 stop loss 77.60 (LTP 78.93).
Important factor/data:
 French Flash Manufacturing PMI 23rd Oct.

GBPINR
GBPINR witnessed a volatile trade last week and after triggering stop loss of buy strategy around 98.50 settled at 99.18. This week, GBPINR may show volatile to positive move following to the hammer candle stick on weekly chart. On the other hand, GBPUSD has stalled its bearish trend and pullback towards $1.6085 from $1.5873 levels and formed a hammer candle stick  this hammer could bring positive move towards $1.6195 and this pullback  may add further upside move in GBPINR too.
Recommendation

Buy GBPINR above 99.50  target 100.00-100.50 stop loss 99.10 ( LTP 99.18)
Important factor/data
MPC Official Bank Rate and Asset Purchase Facility Votes Votes on 22nd Oct.
Prelim GDP q/q on 24th Oct.

JPYINR
Buy around 57.00-57.10 levels strategy rocked last week also, with JPYINR jumped towards 58.77.However, at the end of the week pair retraced more than 1.70% and formed an inverted hammer candle stick which is indicating for possible trend reversal. In near term strong resistance is seen at 58.90 levels and only sustain trade above will confirm next bullish move towards 59.75-60.00. Hence, sell strategy is recommend below 57.65 levels for this week.
Recommendation
Sell below 57.65 target 57.10-56.80 stop loss 57.90.
Important factor/data from China/ Japan:
 China GDP q/yon 21st Oct.
China HSBC Flash Manufacturing PMI on 23rd Oct.

JAPAN – N.A.







More will Update Soon..

Thought for the day






Friday, 17 October 2014

Update on Gold, Silver and Crude oil















Gold



Yesterday.. our buying recommendation in Gold proven great and made a high of 28610 mark

Now what to expect???

Support at 27200---27000 and Resistance at 27650

Decisive close above 27650 will see further upside rally till 27900---28200+ mark in days to come else it could test its support level of 27200---27000 again

Further panic seen only close below 27000 mark

Traders can buy Gold in panic around 27250---27200 with stop loss of 27000 on closing basis for the initial target of 27650



Silver



Support at 38300---37700 and Resistance at 39200

Either side break or close with volume will decide further.. Till then traders can trade in a range with levels only

Anything seems will update via SMS



Crude oil


Yesterday... we recommended buying in Crude oil around 5000 with stop loss of 4940. Too clearly indicated that $78 act as major support in Crude oil and unlikely to breach its support

Now what to expect???

Support at 5080 and Resistance at 5150

Decisive break and sustain above 5150 will take to 5230---5280---5330+ mark in days to come else it could test its support again

Below 5080 will see panic again till 5030---4970 mark

Positional traders can buy Crude oil in panic with stop loss of $78 INR 4930 on closing basis































More will update soon...

Nivesh Special Report – Indian Factors Vs Shine of dollar Index

Indian Rupee – Rupee has stalled to gain against the dollar from mid May 2014 and gave more than 6.77% up move from the 58.32 levels despite of favorable conditions from domestic economic indicators. Economic indicators had witnessed remarkable stability over past year such as WPI Inflation, CPI and GDP growth. Also, international crude oil prices had fallen by 25.68% from $107.67 to recent low $80.01 during the same period, which is one of the important factors which destabilize economic growth of the country and have very high impact over inflation. One important point to be noted is that the volatility in the domestic currency had also reduced considerably during same period.

In light of the above facts, we are trying to analysis that how much stability in domestic economic indicators could save the value of Indian rupee against the bullish trend in U.S dollar and also effect of some others global factors on Indian rupee





For four consecutive months, India retail inflation has been at lower or below the RBI target of 8% for January 2015. As per the government data showed on 13rd Oct CPI rural inflation eased to 6.68% in September from 8.35% a month ago, while CPI urban inflation also eased to 6.34% in July from 7.04% a month ago. This factor continues supporting to the Indian Rupee on expectations of optimism over growth and recovery.


India's headline inflation based on wholesale prices eased to 2.38% in September, lowest since October 2009, compared to 3.74% a month earlier, data released by the government showed which is making a strong case for the Reserve Bank of India governor to focus on boosting growth and high probability for rate cut to spurt the consumer demand.


Since June 2014, India industrial output remains under the nervousness, in August it stood at slowest phase at 0.4% steady from revised previous month data of 0.4%, this is creating concerns of slowdown in growth of consumer goods, steel structures, and aviation turbine output. This factor is a big hurdle for the Rupee strength in near term.



In 2014-2015 first quarter India Economy stood at 5.7% a big step up from the 4.6%, on-year expansion in the previous quarter and the highest growth the country has seen since the three months ended March 31, 2012 as corporate and consumer demand rose on hope the government and central bank are at last steering Asia's third-largest economy out of a slowdown. This indicator is giving support to the Rupee.



Indian weekly Forex reserve showing continuing downward trend for the fifth consecutive week, which recently plunged by $2.754 billion to $311.427 billion in the week to October 3. A reduction in FX reserve may be negative for Rupee.

Other factors that could spoil Indian Rupee


India external debt as of March 31, 2014, showed an increase of $31.2 billion over the year to $440.6 billion.  The difference between growth rates of external debt in rupee and U S dollar terms at end March 2014 and end  March 2013 reflects the sharp depreciation of the against the US  dollar during the period

The European Central Bank and the Federal Reserve may soon see policies going in vastly different directions. Impending easing via QE from the European Central Bank or the Bank of Japan could keep the dollar supportive.

Bullish US Dollar and U.S rate hike concern is the another important factor as this could bring pressure on not only Rupee but other Asian and European currency as well.

Concerns over sluggish economic growth in China is sending emerging market currencies to multi-month lows while concern about the global economic slowdown especially in Europe could hurt EUR and Rupee value significantly.

Technical View 




USDINR gained more than 6.77% from the low of 58.32 levels that was observed in May 2014. Recently pair made a high of 62.2775 and trading at 61.61 as on 16th Oct.
 After an observation of weekly chart below point is indicating maximum upside level 63.50 - 64.10 for the USDINR in days to come.
The wave count drawn on the above chart is showing a C corrective wave complication in May 2014, which started on Nov. 2013 and since then a positive consolidation, was observed above 60.00 levels.
The current ongoing consolidation could be expected to continue unless it gives a breakout of 62.50 levels, which is in fact giving very strong resistance, above which it may move towards next resistance of 63.44 levels which coincide with wave A and possible reversal could expect from 63.50-64.00 levels


Since May 2014 dollar index gained more than 6.86% and settled at 85.92 levels. It recently made a high of 86.75 levels. On the monthly chart a triangle breakout could bring bullish trend for the target of 88.00/89.76 levels and above. Near term support is seen at 84.50 levels and buying could be expected from this level with stop loss of 83.00 levels. 

The red line chart is the EURUSD monthly chart which had dropped by 7.35% from May 2014 to Sept 2014.  Recently it made a low of $1.2499 after broking the triangle support level of $1.2715. In near term, bearishness is expected to continue towards $1.24-$1.22 levels following to the triangle breakdown

As per the sell strategy given since 21st August 2014 in EURINR (technical report) was successful, with pair dropped towards 77.64 levels just near to second revised target of 77.40 levels. EURUSD is expected to continue to fall and it may add further bearish move in EURINR too.


Conclusion:  After the analysis of above positive vs. negative factors affecting the Indian Rupee, it is concluded that very limited weakness may be witnessed towards 63.50 levels in near term. Hence, below mentioned strategy is recommended.

 USDINR - Buy on every dip towards 61.10 -60.90 for target of 62.50 then 63.50 (cmp 61.60) with stop loss 59.80.
 On the other hand, trend reversal could be expected from 63.80-64.00 level, traders may take short position with strict stop loss of 65.20