Web Special: Evening commodity update

Report on Bullions, Base Metal & Energy

 

Commodities were seen dragging for direction with trend setting Chinese markets closed for the lunar New Year holidays. However, the mood was on the negative side after concerns resurfaced over global economic growth with Japan and Germany posting dismal fourth quarter growth numbers. Nevertheless, the jaded Japanese GDP numbers strengthened Prime Minister Shinzo Abe’s case for more monetary stimulus to end deflation. Spot Gold continued to remain subjugated to dampening safe haven appeal and rising dollar. The spot silver followed the suit too and lacked direction. On the domestic front, Gold prices were hardly changed after Indian currency swung between gains and losses on a regular basis. The Indian Rupee started the day on a weaker note but gained some of the lost ground after January inflation rate fell to 6.62 percent against the median forecast of 6.98 percent. Base metal complex on the trend setting London Metal Exchange was steady to positive as gloomy GDP figures from Euro zone economies played spoilsport to a probable restocking by China after the Lunar New Year holidays. On the MCX, most of the metal commodities barring Aluminium traded almost flat to lull. Crude oil prices were languishing in the doldrums after an EIA report overnight showed the production limit in the U.S at the highest since 1992 and after Iran indicated that some progress was made in talks with the U.N. nuclear watchdog.

EVENT IN FOCUS


Mood was seen languishing for direction with key driver of commodity, Chinese market absent. Last couple of weeks has failed to render any cues on the market moves, keeping investors’ sidelined. Ahead into the evening session, the U.S weekly jobless claims would be a crucial data release to watch for and is projected to witness a fall in claims but still stagnant. Recent labor market figures have been pointing at recuperation but not substantial enough to vindicate optimism. The recent indications of recovery in the world’s first and second largest economies have propped up optimism but lack of consensus over the fiscal issues in the U.S could cut back such renewed sanguinity. Also with fears of a currency war at the helm, the upcoming G-20 and G-7 meet in Moscow during the weekend would be a pivotal event and could have a significant bearing on the commodity price moves. With the spending cut deadline in the U.S looming, financial markets in the coming days could remain on the edge and nervy amid improving macro fundamentals. For the day, expect moves to remain subdued but the U.S jobless claims and dismal GDP figures from the Euro region could force investors’ into action from a dormant state.

Technical Commentary

GOLD MINI
MCX FEB


Festering weakness possibly to persist only by baggy trades below the formidable region of 30160 towards 30070/29940. Unproductive trades below 30160 would be an early indication of a recovery move to 30300/380 or even higher.


SILVER MINI
MCX FEB

Inability to trade below 57200 would call for a choppy with mild positive bias trading. A direct dip below 57200 would be an early indication of renewed selling pressure.


COPPER
NCDEX/MCX/ FEB

While prices stays above 441 expect rallies which could target 447 initially, but a convincing breakout above the same will take prices till 451/454 or more later.

NICKEL
MCX FEB

Prices have been consolidating inside 998-977 regions for the last few trading days. Either side breakout would suggest fresh directional moves. A direct rise above 998 could take prices directly towards 1020 whereas on the downside, dip below 977 next strong support is seen at 952.

CRUDE OIL
NCDEX/MCX/ FEB

Prices have failed to push prices past above the formidable region of 5275 region in early sessions, elevating the possibility of a turn lower. But this possibility may substantiate only by breaking the support of 5220 region with brawny volume to 5185/5145.Botched trades to close below 5220 region could entice buying mood towards 5255/5275.


Source: Geojit Comtrade