Commodity Tips online advisor 08 July 2014

Commodity Exchange-- Contract----- Trend--------- S2------- --S1-------- LTP--------- R1--------- R2
Gold -------MCX ------Aug-----------Sideways----27250----27350----27490----27600----27750
Spot Gold-------------------------------Sideways----1306----1311----1318----1323----1330
Gold Hedge----NCDEX----July---------Sideways----25130----25230----25359----25460----25599
Spot Silver------------------------------Sideways----20.60----20.80----20.98----21.00----21.25
Silver Hedge----NCDEX----Aug--------Sideways----4030----4050----4086----4110----4140
Base Metals

LME Copper----------------------------Up----7020----7070----7120----7160----7230
Crude Oil----MCX----July----------------Sideways----6120----6170----6215----6260----6300
Crude Oil----NYMEX----Aug----------Sideways----101.80----102.60----103.38----104.10----104.70
Crude Oil----NCDEX----July--------------Sideways----6160----6210----6261----6300----6390
Brent Crude Oil----MCX----July-----------Sideways----6640----6690----6738----6780----6820
Brent Crude Oil----NYMEX----Aug----Sideways----108.40----109.30----110.03----110.70----111.40
Brent Crude Oil----NCDEX----July----Sideways----6570----6620----6665----6710----6750

International Commodities

  • Euro Zone Sentix Investor Confidence jumped to 10.1-mark in July.
  • LME Copper inventories jump 1.8 percent to 159,350 tonnes.
  • Indian Rupee fell by 0.4 percent yesterday, biggest drop in 3 weeks.
  • German Industrial Production slumped by 1.8 percent in May.
  • API crude oil inventories expected to decline by 2.7 mn bbl – Reuters.
  • Japan’s Current Account was at a surplus of 0.38 trillion Yen in May.


Spot gold declined on Monday on stronger than expected jobs data that has raised expectations of an early interest rate hike. The dollar index also neared a two week high after a government report showed that the US jobless rate was near a 6 year low suggesting bright economic prospects.
On the flip side, the investment interest seem to have regained in gold as SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 1.8 tonnes to 798.19 tonnes on Monday.
On the MCX, gold prices declined by 0.24 percent and closed at Rs.27490/10 gms.

Spot silver prices declined by 0.4 percent in line with weakness in bullion prices. In addition, the strength in the dollar index on optimistic data in the recent weeks acted as a negative factor. Weakness in copper and nickel prices further exerted downside pressure.
On the MCX, silver prices gained marginally by 0.3 percent in contrary to the gains in international markets and closed at Rs.44780/kg.
Outlook Gold Silver
On an intraday basis, we expect bullion prices to trade lower on account of profit booking at higher levels. The optimism in the US economy has been taking a toll on gold prices as the job market and the housing market gains momentum. Besides, hopes of hikes in interest rates sooner than later will also exert downside pressure on prices.
On the MCX, gold prices are expected to trade on a weak note in line with weakness in international markets.

Crude Oil

Oil prices declined on both sides of the Atlantic on Monday to the lowest levels in a month as Libya prepared to resume oil exports from two ports closed nearly a year, and as supply from Iraq remained unaffected by violence sweeping the OPEC country. Libya's state-run National Oil Corp lifted a force majeure from the major eastern Ras Lanuf and Es Sider oil ports after rebels agreed last week to end a blockade. The two Libyan ports had been exporting about 500,000 barrels per day (bpd) of crude, far below the 1.4 million bpd that the country pumped in the second quarter of last year, before protests started.
Oil prices remained largely unaffected by positive U.S. employment trends data released on Monday. The Conference Board's Employment Trends Index, summarizing eight employment-related indicators, rose 0.5 percent in June to 119.62, suggesting continued strong job growth.
On the MCX, crude prices declined by 0.1 percent and closed at Rs.6215/bbl

API inventory forecast
The API is scheduled to release its weekly inventories report tonight at 8:00pm IST and US crude oil inventories is expected to decline by 2.7 million barrels for the week ending on 4th July 2014. Gasoline stocks are expected to remain flat whereas distillate inventories are expected to increase by 1.2 million barrels for the same time period.

Natural Gas
U.S. natural gas futures lost over 4 percent on Monday, falling to their lowest level in six months, on forecasts for cool weather over the next week and expectations for another big storage build.
On the MCX, NG prices declined by more than 3 percent and closed at Rs.253.50/Mmbtu.

Outlook Energy
On an intraday basis, we expect crude prices to trade sideways as the risk premium related to geo-political tensions and Iraq tensions have faded. On the other hand, the economic data sets released from the US points towards increasing demand for energy besides the API inventories due tonight which is expected to show a drawdown supporting crude prices.
On the MCX, crude prices are expected to trade sideways in line with international markets.

Base Metals
Base metals on the LME traded on a mixed note yesterday owing to mixed global market sentiments. Further, mixed trend in LME inventories exerted downside pressure on prices.
Zinc was the biggest gainer in the base metals space with a jump of 1.2 percent owing to a drop in output at Antamina and mine closures by Buenaventura and San Ignacio de Morococha in Peru, world’s leading zinc producer.
In the Indian markets, base metals traded mixed in line with international trends.

LME Copper prices fell by 0.2 percent yesterday taking cues from signs of increased supply as can be seen from a whopping 1.8 percent jump in inventories to 159,350 tonnes as stockpiles in Busan, South Korea, jumped by almost half.
Further, mixed market sentiments along with mixed economic data from the Euro zone acted as negative factors. The red metal touched closed at $7140.3/tonne in the last session.
MCX Copper prices traded on a flat note yesterday and closed at Rs.435/kg.

Outlook Base Metals
We expect LME copper prices to trade higher owing to estimates of positive jobs data from the US in the evening session.
However, strength in the DX along with rise in risk aversion in the markets will cap sharp gains.
In the Indian markets, Copper prices will trade with a positive bias taking cues from international trends and Rupee depreciation.

Important Events for Today
Indicator ------------------------------Country Time (IST) Actual Forecast Previous Impact
Current Account------------------------ Japan -------5:20am 0.38T 0.17T 0.13T Medium
German Trade Balance------------------ Euro -------11:30am ------- 15.7B 17.7B Medium
Halifax HPI m/m --------------------------UK ---------8th – 9th ------- -0.3% 3.9% Medium
Manufacturing Production m/m---------- UK---------- 2:00pm--------- - 0.5% 0.4% High
ECOFIN Meetings------------------------ Euro--------- 2:45pm - ------------------ - Medium
NIESR GDP Estimate --------------------UK----------- 7:30pm --------------- - 0.9% Medium
JOLTS Job Openings--------------------- US------------- 7:30pm ------- 4.53K 4.46K Medium
FOMC Member Kocherlakota Speaks-- US------------ 11:15pm - ---------------- - Medium

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