Gold's decline despite Middle East, Ukraine worries does not augur well for prices

Updated: Jul 26 2014, 21:42pm hrs
Gold pricesGold's decline despite simmering tensions in the Middle East and Ukraine does not signal well for prices in the near term. (Reuters)
Gold prices fell on Thursday after weekly jobless claims numbers beat expectations and stimulated investors out of safe-haven positions. Gold's decline despite simmering tensions in the Middle East and Ukraine does not signal well for prices in the near term, especially at a time when physical demand in Asia is dull. India is estimated to have imported 100 tonnes of gold in June, about twice the normal average after private agencies were allowed to import the metal. Traders will have to live with a record 10 percent import duty, as the government does not have a proposal to end it as of now. The RBI also imposed the 80-20 rule that requires a fifth of all bullion imports to be re-exported.

Over all, MCX Gold August future is in consolidation and sustaining above the level of 27850. So for the coming week, we are expecting bearish movement. For the coming week 27300/27000 will act as a major support whereas 28000/283000 will act as a major resistance level in MCX Gold August future. For the next week in MCX Gold, trader can use sell one higher level strategy, if MCX Gold August future sustains below the levels of 27850 then it could test the levels 27400/27000.

Technically, MCX Silver September futures is in consolidation and sustaining in range. For the coming week 45800/47200 will act as a major resistance levels where as 43800/42400 will act as major support in MCX Silver September futures. For the next week in MCX Silver futures, traders can use sell on higher level strategy, if MCX Silver September futures sustains below 45800 then it could test the levels of 43800/ 42500.

Crude Oil futures traded bearish last week amid speculation that rising U.S. gasoline stockpiles signal reduced demand in the worlds biggest oil consumer. U.S. refineries are clearly turning more crude oil into refined petroleum products at present than is actually needed. Despite of the conflicts in Ukraine, Gaza and Iraq, Oil prices remained steady but on weak note, as global supplies remained ample. Also, in Libya, oil production has risen to around 500,000 barrels per day, but there is no progress on reopening of Brega oil port.

For the coming week 6000/5800 will act as major supports levels whereas 6400/6550 will act as major resistance in MCX Crude oil July futures. For the next week, trader can use sell on higher level strategy, if MCX Crude July future sustain below 6230 levels then it could test the levels 6050/5930.

The LME Index of six industrial metals rallied strongly last week after better-than-expected Chinese PMI data and strong European data. The HSBC China Manufacturing PMI came in at 52 in July, well above expectations and the highest level in 18 months. There might be some profit-taking or selling from time to time, but it is still very strong and may go higher.

Trend of MCX Copper August future is in consolidation and also sustaining in range. For the coming week, it could face major resistance of 440/453 whereas 424/415 could be a major support in MCX Copper. For the next week trader may follow buy on lower levels strategy, if MCX Copper August future sustain above 438 levels then it could test the level of 445/452.

By Vivek Gupta

Director Research, CapitalVia Global Research Limited