Gold Silver Reports ~ The first week of the new year was an exceptionally volatile one with Crude Oil dropping to new 13-year lows as the oversupply worries continue to worsen. Precious Metals finally broke out of its month long trading range as rallied to $1100.0 whereas Silver largely remained in the same range.
Base Metals also fell to new lows as the Chinese market collapsed again and as worries continued to mount on growth from the largest consumer of metals was slowing down.
We have a light economic releases calendar this week. Along with CrudeOil inventories on Wednesday and NaturalGas Storage on Thursday, we have unemployment~claims on Thursday and Retail Sales, PPI and Consumer Sentiment on Friday.
>>Precious Metals are consolidating in between $1095.0-$1110.0 (Rs.25900.0-Rs.26150.0) as we write this. Tensions in the Middle East along with a spooked equitiesmarket has been supportive for gold prices and should continue to keep downside limited.
>>Further directional, move is expected only a break above or below the current range. On the upside, $1120.0 (Rs.26350.0) is seen as a potential target if prices break above the resistance while on the downside, $1065.0 (Rs.25500.0) is seen as subsequent-support.
~Base Metals are expected to trade with a negative bias this week. Copper is already trading at a 6 year low and a close near this level should put further downside pressure on rates.
~The next support is expected to come into play at $4250.0 (Rs.285.0) and $4000.0 (Rs.270.0) going ahead. Nickel is also expected to move lower following Copper while the rest of the base metals are likely to consolidate this week with a possibledownside.
~In the Energygroup, Crude~Oil will continue to move lower and we are expecting $30.0 (Rs.2000.0) as a potential support level for prices breaking which $25.0 (Rs.1700.0) is seen as the next support level. While the fundamentals are largely unchanged, the inventories report on Friday may stirup some buyers, also, lower prices may trigger a round of buying this week if rates slip enough for traders to cover their shorts. The short term outlook is negative.
~Hedge funds positioning on Crude Oil futures dropped 12,174 contracts to 184,177 contracts in the previous week. Despite prices plunging to new lows, longs gained 11,785 contracts while shorts added 23,959 contracts. Net shorts on Natural Gas fell 13,522 contracts to 194,350.
Net longs on Gold & Silver added 7485 and 922 contracts to 26,560 and 21,626 respectively – this is in line with the rally in prices and might indicate further upside in precious metals. ~ Neal Bhai Reports