Gold and Silver Weekly Technical Review and Commodity Tips

1
Gold and Silver Weekly Technical Review and
Commodity Tips
Gold Commodity Besides, there are several other
market dynamics also playing in the market. Post
the Fed testimony, Yellens comment on the
economic growth and continuous cut down in the
asset purchase programme in the US has pushed the
USD index to revive strongly higher from the
multi weeks low and at present trading at
79.741. We believe USs response over the
economic stance may continue to weigh on
the bullion market by which the entire
precious metal group may remain under pressure.
The dollars denominated other precious metals
also and likely that they would extend their
loss in the near term by which gold may also
remain lower. On a contrary, while we look at the
economic data from the US for the next week we
expect most data to come positive for the country
by which the risky assets may move higher. Now,
developing a relationship with equity and risk
free asset i.e. Bond yield, any improvement in
the economic data may drive equities higher
while the 10 year bond yield may perform
inferior. In this regard we may see an unstable
movement in the precious metal that is gold.
Possibly this scenario might also push the gold
prices higher anytime in the near future and by
which the expected downside potential may be
limited. This may also be a risk to our bearish
outlook on gold while Ukraine tension may
continue to be a concern in the global market.
Looking at the above scenario we believe
the commodity may trade down while
volatility is certainly likely to see in the
underlying. From the derivatives front, we
have seen a marginal decline in the prices
while both volume and open interest have
also declined a tad. This indicates for the
near gold trend may remain lower while
any abrupt event could spoil the existing
trend. Lastly, while we look at the implied
volatility of GOLDUSD we see that due to
steady price movement with a bearish trend
the volatility is lowering indicating that
the underlying may remain in line with the
existing trend meaning the prices gold may trade
down. As of Friday the implied volatility for
GOLDUSD holds at 13. Gold Mcx June Commodity
futures prices witnessed downside fall in the
last week. As of 9 May, 2014 prices are trading
at 28525, down by 1 from the previous weeks
close. For the week ahead prices are expected
to remain downside as long as 29050 holds.
Immediate support is seen at 28400 levels.
Break below 28400 could lead the drop to extend
towards 28200 levels. For short term traders we
suggest selling at higher levels Gold Weekly
Trend Sideways Gold Support at 28200-27800
Gold Resistance at 29300-29700
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Silver while there were ups and downs in the
whitish precious metal last week, as with the
case with gold overall trend continued to
support negativity. Silver prices have been on a
continues downtrend since the recent peak of over
22 per ounce in the month of February as per
Comex markets while the latest low was witnessed
in the past week of around 19.10 per
ounce. While as also stated earlier, silver
as a commodity takes broad cues from
movement in gold which too has been on a
downward spiral for long time now. In the
past week, we had maintained a selling
stance on the commodity wherein July month
Comex prices recorded a slippage of 1.8 to
19.20 per ounce meanwhile it also underperformed
the move as equated to gold commodity which was
lower last week by nearly 0.8. The commodity did
saw some optimism seeping in, particularly in
the initial sessions of trade though ease
of tensions in Ukraine region and negative
momentum into the Euro currency pulled
prices lower. Silvers inherent weakness owing
to subdued demand is one of the key reasons
behind its continued underperformance
notwithstanding the fact that silver derives
a mix of consumption from industrial and
precious metals. With the recent industrial
related data points remaining stable to positive
from US and Europe and base metals too advancing
moderately, silver should have had got some
support in its price movement though the same
scenario has not been playing out lately. During
the next week, while there are a number of
economy related updates due from the US and
Europe, we believe most of them to
maintain stand stable to optimistic
meanwhile continue to add negativism over the
Bullion complex as a whole including silver.
While concerns regarding problems going on in
Ukraine remain as there are fresh tensions
arising after separatists group named Donetsk
Peoples Republic have asked for a vote on
Sunday i.e. 11th May to become an independent
republic, a probable stride towards
amalgamation Russia. Donetsk is the most
populous region of the country, with 4.5 million
people and the industrial backbone of Ukraine.
Insurgents have apprehended government
buildings in a dozen of cities and towns,
and fight with government crowd. It is highly
likely that tension is going to escalate during
the initial days next week and might drive some
gains in Bullion complex. While broader trend for
silver remaining lower, we suggest selling the
commodity from higher levels Silver Mcx
Commodity July futures prices witnessed downside
movements in the last week. As of 9 May, 2014
prices are trading at 41453, down by 2.3
from the previous weeks close. Prices are
likely to continue its downside journey for the
week ahead. Key resistance level to watch for the
week is at 43455 (previous week high), which is
expected to hold the downside view. Downside
potential is seen until 41200 levels
initially. A significant break below 41200
could lead the drop to extend towards 40600 and
then 40300 levels. For short term traders we
suggest selling Silver Weekly Trend Down Silver
Support at 41,000-40,000 Silver Resistance at
43,000-44,200 Commodity TIps Gold Mcx June Sell
at 28670-28700 SL 29030 TGT 28300-28050 SL 29030
Silver Mcx July Sell at 42000-42100 SL 42950 TGT
41300-40600