-- Posted Tuesday, 4 June 2013 | | Disqus
The contraction in the US manufacturing ISM numbers in May suggest that Federal Reserve will delay its withdrawal from quantitative easing into next year. The reconstruction in Oklahoma after devastating hurricane and floods, reconstruction related demand in Easter Europe after worst floods in decades should create more employment in USA and Eastern Europe. Base metals demand will also be high. Investor’s dilemma will continue as natural calamity jobs creation in USA and elsewhere in the world is giving a temporary boost to economy. The Federal Reserve and other central banks will wait and watch for a few more months before deciding from QE.
Nobody likes the stock markets to fall and the Federal Reserve also does not want a crash in US stock markets to trigger a global collapse. There will not be any hasty withdrawal from QE. This is one of the reasons why US stock market rose even after a bad manufacturing number. One should buy far dated call options for gold and silver between April 2014 and June 2014 as premiums are very low. (please note that personal bias is always towards buying an option rather than selling an option)
Technically gold and silver are bullish and can rise further. A fall in US trade deficit will be bullish for the greenback and the US dollar.
US ECONOMIC NUMBERS THIS WEEK
The U.S. international trade deficit, set for release on Tuesday, is forecast to have widened slightly to $41 billion in April from $38.8 billion in March.
Wednesday with see the release payrolls processor ADP. Economists polled by Reuters have forecast that the ADP data will show private-sector employers added 165,000 jobs in May, compared with 119,000 in April. Wednesday's numbers to watch will include the ISM's release of its U.S. services-sector Purchasing Managers' Index for May. A reading of 53.4 is forecast for May, up from April's 53.1. The Fed's Beige Book is expected on Wednesday. That report will give a look at the economy in 12 regional Federal Reserve bank districts.
On Thursday, initial claims for unemployment benefits will grab attention - on the day before the big payrolls report from the U.S. government. Initial jobless claims are projected to have slipped to 345,000 in the week that ended June 1, from 354,000 in the previous week.
COMEX TECHNICAL VIEW
COMEX GOLD AUGUST 2013 – current price $1412.80
Bullish over $1403.00 with $1422.00 and $1442.00 price target
Bearish below $1395.0 with $1389.00 and $1372.00 as price target
Neutral Zone between $1395.00-$1403
Break point: $1395.00-$1403
- Gold needs to trade over $1403 to target $1422-$1434.60
- There will be buyers on dips as long as gold trades over $1394
MCX GOLD AUGUST – prices in Indian rupees
If the Indian Rupee continues to weaken against the US dollar then commodity prices in India will only rise. The sentiment for the rupee is highly bearish. Importers are covering their near term payable on any twenty five paisa to thirty paisa dip (if any). I was goggling for rupee and projections were from 60-62 against the US dollar in the next six months to nine months. Fundamentals of the Indian economy are no doubt very weak. If the rupee remains on the bearish zone then the chances of a fall below 26500 is very less and the chances of a rise to 28500-29500 will be very high.
India has imported around 162 tonnes of gold in May. The government is just putting the blame game on gold for all its current account deficit woes. There is speculation of more curbs on gold imports. Curb on gold imports will only increase premiums on physical gold bars. Curbs on gold imports also reflects the mess which the Indian people has been put in under the leadership of eminent economist prime minister Manmohan Singh. Indian gold demand will continue although pace of demand will vary. The only to curb gold imports is shutting down gold imports completely.
Energy imports are a big contributor to current account deficit. This can be reduced by just using Indian railways and solar power. If every railway platform in India had a solar panel to generate electricity then India would have been a energy surplus nation without any dependence on coal imports and imports of other fossil fuels. The energy policy has to be changed in India and railways has to be used not just for transport but for all round development.
Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. Prepared by Manan Somani
Disclosure: Insignia consultants or it employees do not have any trading positions on the trading strategies mentioned above. Our clients do have positions on the trading strategies mentioned in the above report.
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NOTES TO THE ABOVE REPORT
PLEASE NOTE: HOLDS MEANS HOLDS ON DAILY CLOSING BASIS
PLEASE USE APPROPRIATE STOP LOSSES ON INTRA DAY TRADES TO LIMIT LOSSES.
APPROPRIATE STOP LOSSES PER LOT IN US DOLLARS ON THE TRADING CALLS GIVEN IN THIS REPORT
COMEX GOLD – $15-$17
COMEX SILVER: $25-$30
COMEX COPPER: $3
NYMEX CRUDE OIL: $0.60
SPOT SILVER: $0.25
SPOT GOLD: $15-$17
THE TIME GIVEN IN THE REPORT IS THE TIME OF COMPLETION OF REPORT
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-- Posted Tuesday, 4 June 2013 | Digg This Article | Source: GoldSeek.com