COMMODITY Market Outlook Oct 31- Nov 4, 2011

Key economic data’s are expected next week which includes the FOMC rate decision and Nonfarm payrolls from US and ECB interest rate announcement from the Euro Zone.

GOLD : -

 Gold even the broad positive trend is intact, buying trend looks exhausted after the recent runs and prices likely to take a dip towards 27250 regions before the next swing higher. But unlikely to set off a major sell off unless below 27200, such initiative would lead the prices pointing towards 27000 then to 26850. A direct rise above 27700 regions could rejuvenate buying interest targeting 28000/28250/28800/29250.

SILVER:  -

Upcoming Week session 58600-59000 likely to act as a strong resistance, inability to surpass the range could dilute the hopes for a rise and prices may come down to around 54500/55400. Rallies above 59000 with volume would be signal of continuation of further uptrend level 60500/61800/62300

Base Metals: 

COPPER: -

Market sentiments continued to be on a positive side buoyed by the Euro rescue deal and encouraging economic indicators from US.

 Weekly’s bias should largely stay positive as long as prices stay above 388, but it would be required to trade consistently above 404 to invite fresh bargain hunting. Close below 385 likely be a sign of prolong selling again.

 NICKEL: -

 Upcoming week session main support of nickel is 958/955. If this level holds so drift higher to 1005. Above 1005 we will see 1025/1040. A turn lower below 955 expect to extend the sell off again.

Lead: 

 After a sharp fall from 119, short covering rally is on the process for the last couple of weeks, but upside is capped at 101 levels. If prices able to break the same, uptrend may see towards 101.80 then 102.50/105.20 levels in the near term. Conversely below 96 weakness is seen towards 94/93 levels.

 ZINC:  

 Bounce back rally is on the way, after it fell to 86, but horizontal resistance is capped at 95.5 region for the day. If prices able to break above the same, bulls may push the prices towards 98.50 then 101.50  levels in the immediate run. On the lower side, 93 is the support breaks below the same, downtrend may see towards 92.15 then 90.15 levels.

  

ALUMINIMUM:-

 In upcoming session if 109 hold this levels so, we see immediate target is 112/115 levels.

CRUDE OIL:-

Last week we have seen Japan inventory which wasn’t favourable for crude oil upside. Overall trend of crude oil is bullish we may expected 4770/4900 levels. If crude oil  holds 4500 level so, see good rally in this counter.  If 4430 holds below we will see fresh selling position or you can say fresh bargain hunting starts in the counter.

Rupa Mehta

Sr. Analyst Commodity - Research & Education

WELLINDIA Group

Diwali Special

The gold has always performed well when there have been clouds over the dollar. It is expected that gold may burn bright as long as clouds of uncertainty hover over the global economy. However, don't expect gold to fire with the same amount forever.

If we talk about the global scenario, which is uncertain and complicated, gold is going to benefit and prices will continue to go up. They cannot keep rising forever, but at the moment, it is not a bubble. If anyone long term investment objective then they can look at increasing there exposure to gold.

In the month of August 2011 Gold and silver continue traded in upward trend. A year ago the price of the yellow metal was $1200 an ounce; today it is above $1600. It has increased in value over the last 12 months by 33%. Since last Diwali, gold prices have rallied from about Rs 20,000 to a high of Rs 29,000 in mid-September, a rise of 45%. Now we have seen huge fluctuations in gold prices for last few years.

Long term point of view gold demand remains strong. Now a days gold ETF demand is continuously increasing day by day in the market. Investors stick to their holding in gold since central banks around the world including China, Russia, South Korea, Mexico and Brazil continue to increase their gold reserves.

Diwali can never be complete without the shine of the Gold. For the majority people, buying even one gram of the yellow metal is an integral part of the sophisticated ceremony of welcoming Goddess Lakshmi home.

Although investor should invest some part of there investment in gold, be aware of the risk associated with it. Gold is certainly a great investment to preserve investor capital and earn good returns. The returns over the last 10 years have been truly outstanding at 18% compound annual growth rate. However, this is also a matter of concern as the possibility of earning the same returns now has been greatly reduced.

At the same time, gold doesn’t pay dividends or bonuses. The only way to earn returns is by the rise in the prices in long term.

Gold has a strong inverse correlation with the strength of the dollar against other major currencies. Since globally gold is priced in dollar, in India too, the rupee-dollar exchange rates play a major role in determining the price of the yellow metal.

In international market gold has a good support around $1,560 per ounce and domestic market gold prices have a strong support 25550.

In this Diwali, gold prices are expected to trade in the Rs 26,000-28000 range as volatility in the price of the yellow metal in international markets and the fluctuation in rupee.