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mcx tips zone Technical Levels for Metals and Energy 19 June 2014

Commodity Exchange-- Contract----- Trend--------- S2------- --S1-------- LTP--------- R1--------- R2
Bullions
Gold -------MCX ------Aug----------Sideways----- 26550----- 26700 ----26826------ 27000--- 27100
Spot Gold----------------------------- Up -----------1260 -------1271 -----1277 -------1285---- 1290
Gold Hedge NCDEX--- July---------- Sideways---- 24400----- 24541---- 24657 ------24817 ---24909
Silver------- MCX----- July---------- Sideways -----41700----- 42000---- 42398 -----42700---- 43000
Spot Silver ----------------------------Up -----------19.50 ------19.70 ----19.84------ 19.90 -----20.20
Silver Hedge NCDEX --June--------- Sideways -----3760------ 3790------ 3829------ 3850------ 3880
Base Metals


LME Copper -------------------------Up----------- 6660------- 6690------ 6739------ 6780------ 6830
Copper -----MCX----- June ---------Up -----------403 ---------405 -------407.40---- 410-------- 413
Zinc --------MCX -----June---------- Up--------- 126.00 ------127.00 ----127.95---- 129.00-- 130.00
Lead -------MCX----- June ---------Up ----------124.50 ------125.50---- 126.35---- 127.20--- 128.00
Aluminium-- MCX -----June--------- Up---------- 109.00------ 110.00---- 110.75---- 111.80--- 112.80
Nickel------ MCX---- June ---------Sideways---- 1095 --------1105------ 1115.70---- 1130------ 1145
Energy
Crude Oil --MCX ----June----------- Up--------- 6300--------- 6340------ 6378------ 6420 ------6480
Crude Oil ---NYMEX July -----------Up ---------105.10 -------105.80 ----106.43 ----107.10-- 108.10
Brent Crude Oil MCX June---------- Up ----------6590 ---------6630------- 6676------ 6710---- 6770
Brent Crude Oil NYMEX July --------Up ----------113.00------- 113.70---- 114.37--- 115.00 ---116.10
Natural Gas MCX--- June----------- Sideways---- 275 ----------278 --------280.4----- 283------- 288


International Commodities Update
Overview

Metals and Energy Fundamental Report
Metals and Energy Technical Reports

US Federal Reserve hinted towards rise in interest rates from 2015.
Gold regains its safe haven status after FOMC statement.
US crude oil inventories fell by 0.579 mn bbl in the last week.
Indian Rupee wiped off its gains yesterday from earlier trade.
US Current Account was at a deficit of $111 billion in Q1 of 2014.

Bullion
Gold

Gold prices gained on Wednesday as Federal Reserve slashed its forecast of US economic growth appealing bullions safe haven status. It also hinted towards slightly faster pace of interest rate increases next year which the markets ignored, but the possibility of rate hikes will lead to correction in gold prices as gold is a non yielding asset.
After a two-day policy meeting, the central bank slashed its forecast for U.S. economic growth to a range of between 2.1 percent and 2.3 percent from an earlier forecast of around 2.9 percent, but expressed confidence the recovery was largely on track. The Fed also reduced its monthly asset purchases from $45 billion to $35 billion, but suggested rates eventually would be lower than it had indicated previously. A high reading for U.S. inflation on Tuesday raised expectations the Fed might signal a sooner-than-expected rise in interest rates. Tightening rates would also lift the dollar and put pressure on dollar-priced commodities like gold.
On the MCX, gold prices declined marginally by 0.05 percent and closed at Rs.26826/10 gms.

Silver
Spot silver prices on the international markets gained by around 1 percent tracking gains in gold prices. Although the base metals pack largely traded on a negative note, silver prices largely tracked sentiments from the outcome of the Fed’s statement.
On the MCX, silver prices rose marginally by 0.1 percent and closed at Rs.42398/kg.

Outlook Gold Silver
On an intraday basis, we expect bullion prices to trade sideways as Fed’s forecast of downward revisions in US GDP indicates that the economy still lacks momentum although the economy is on a growth trajectory. However, the rise in interest rates in the US at a faster pace than the market expectations will act as a negative factor. On the other hand the situation in Iraq has intensified further as militants take control over the oil fields and the country is in a state of civil war.
On the MCX, gold prices are expected to trade sideways taking cues from international markets.

Energy
Crude Oil

WTI crude oil prices dipped on Wednesday EIA numbers showed domestic crude inventories fell much less than an industry group had reported. While Brent crude rose and traded above $114 mark and rose to nine month high as Sunni militants opposing Baghdad's Shi'ite government battled their way into Iraq's largest refinery, raising concerns of supply disruptions from OPEC's second-largest producer.
On the MCX, crude prices declined by 0.6 percent and closed at Rs.6378/bbl.
EIA inventory update
The EIA released its weekly inventories report last night at 8:00pm IST and US crude oil inventories fell by 0.579 million barrels for the week ending on 13th June 2014. Gasoline stocks rose by 0.78 million barrels whereas distillate inventories rose by 0.43 million barrels for the same time period.

Natural Gas
U.S. natural gas futures eased 1 percent on Wednesday, on estimates for another bigger-than-normal storage build report on Thursday. MDA Weather Services forecast above-normal temperatures will persist in the U.S. Midwest over the next five days before cooler weather returns over the next six to 10 days. On the MCX, NG prices declined by more than 1.5 percent in line with weakness in international market.

Outlook Energy
On an intraday basis, we expect crude prices to trade on a positive note on escalation of violence in Iraq which has created a supply constraint in oil markets. On the other hand, less than expected withdrawal of crude inventories raises concerns on the demand side in the US, although the driving season has kick-started creating incremental demand for gasoline.
On the MCX, crude prices are expected to trade on a positive note taking strong cues from international markets.

Base Metals
Base metals on the LME traded on a mixed note yesterday taking cues from yet another round of tapering of $10 billion from the QE program. Also, mixed market sentiments acted as a negative factor.
However, declining trend in inventories capped sharp gains. Further, weakness in the DX supported gains.
In the Indian markets, base metals traded higher owing to Rupee depreciation.

Copper
LME Copper prices traded on a flat note yesterday owing to statement by the Federal Reserve Chairwoman Janet Yellen that the Fed is likely to reduce the pace of asset purchases in further measured steps as the US economy is on the path of recovery.
Also, optimism regarding attempts by the Chinese Government to support growth along with weakness in the DX cushioned sharp downside. Further, decline of 0.3 percent in inventories to 160,675 tonnes added an upside to prices. The red metal touched an intra-day low of $6692.5/tonne and closed at $6718/tonne on Wednesday.
MCX Copper prices declined by 0.3 percent and touched an intra-day low of Rs.405.85/kg before closing at Rs.407.4/kg in the last trading session.

Outlook Base Metals
We expect LME Copper prices to trade on a positive today as the optimism regarding the US and Chinese economic recovery will lead to positive demand outlook for the metal. Also, weakness in the DX coupled with upbeat market sentiments will support gains in prices.
However, expectations of weak economic data from the US and UK will restrict sharp upside.
In the Indian markets, Rupee movement will provide further direction to prices.

Important Events for Today

Indicator -----------------------------Country Time (IST) Actual Forecast Previous Impact
FOMC Press Conference ------------US -----12:00am - - ------------------------ High
Retail Sales m/m--------------------- UK------2:00pm ----------- (-0.5%)-- 1.3% High
Eurogroup Meetings -----------------Euro ----All Day - ------------------------- - Medium
CBI Industrial Order Expectations ---UK----- 3:30pm -------------- 3 -------0 ----Medium
MPC Member McCafferty Speaks-- UK----- 5:00pm - - ------------------------- Medium
Unemployment Claims ---------------US ------6:00pm - ----------316K ----317K High
Philly Fed Manufacturing Index ------US ------7:30pm ------------ 14.3------ 15.4 High



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