Commodity market outlook: Gold may continue to trade on a positive note

Written by FE Online | Updated: Aug 16 2014, 23:43pm hrs
Precious metal: Gold futures edged higher on Thursday, as investors looked ahead to key U.S. economic data later in the session for further clues on the health of the economy. Problems in Russia-Ukraine-Iraq-Gaza during the week caused a lot of concern in the global financial markets wherein the USDX rose while simultaneously Gold surged touching the $1323 per ounce mark, its three week high. As of the next week is concerned we are getting highly conflicting views on the commodity as on one side it is likely to continue to get support from intensifying geopolitical problems in Middle-east and Eurasia; at the same time internal gold related cues still suggest weakness. Overall the commodity may continue to trade on a positive note as tensions persisted in Ukraine and the Middle East area. However, traders note that Gold had been trading in a largely ranged manner for past couple of days. We expect Gold prices to remain higher for the week as uncertainty in Ukraine and the Middle East area and safe haven buying can push the prices higher.

Over all, MCX Gold October future is in bullish and sustaining on higher levels. So for the coming week, we are expecting good buying rally from lower levels. For the coming week 28400/28000 will act as a major support whereas 29500/30000 will act as a major resistance level in MCX Gold October future. For the next week in MCX Gold, trader can use buy on lower level strategy, if MCX Gold October future sustains above the levels of 28800 then it could test the levels 28990/29300.

Technically, MCX Silver September futures is in consolidation and sustaining in range. For the coming week 47000/48500 will act as a major resistance levels where as 42500/41000 will act as major support in MCX Silver September futures. For the next week in MCX Silver futures, traders can use buy on lower level strategy, if MCX Silver September futures sustains above 43700 then it could test the levels of 44900/46500.

Energy: Crude oil futures were lower on Thursday, after data showed that Germanys economy contracted in the second quarter while growth in France stagnated, fuelling concerns over a slowdown in global demand.

Germanys gross domestic product shrank by 0.2% in the three months to June, the first drop since 2012. Economists had forecasts a contraction of 0.1%. First quarter growth was also revised down to 0.7% from 0.8% previously. Investors looked ahead to the release of U.S. jobless claims data later in the day for further clues on the health of the economy.

For the coming week 5600/5350 will act as major supports levels whereas 6200/6400 will act as major resistance in MCX Crude oil September futures. For the next week, trader can use sell on higher level strategy, if MCX Crude September future sustain below 5900 levels then it could test the levels 5800/5650.

Base Metal: Copper futures fell to a seven-week low on Thursday, after disappointing Chinese economic data fuelled concerns over the health of the worlds second largest economy. Meanwhile, Chinese bank lending and money supply growth for July also came in below expectations, underlining concerns about slowing growth in the world's biggest consumer of the industrial metal. Copper prices have been on a downward trend in recent sessions amid indications of a slowdown in demand from China, the worlds largest consumer of the red metal. Market players also continued to monitor geopolitical developments from Ukraine and the Middle East.

Trend of MCX Copper August future is in consolidation and also sustaining in range. For the coming week, it could face major resistance of 425/435 whereas 390/378 could be a major support in MCX Copper. For the next week trader may follow sell on higher levels strategy, if MCX Copper August future sustain below 412 levels then it could test the level of 402/390.

By Vivek Gupta Director Research, CapitalVia Global Research Limited