MC: See support for crude at $51/bbl: Bharath Kumar
Crude prices have made another low this year. Gold is also not doing much and is trading unchanged at this point. Base metals have continued to decline for the seventh straight week, and most of them are down nearly 2-4% on the lower side.
Bharath Kumar of Global Financial Market sees resistance for gold at Rs 11,900 per 10 gm and support at Rs 11,700 per 10 gm.
He sees support and resistance for crude at Rs 2,680 per barrel and Rs 2,870 per barrel respectively. “In case of crude, somewhere around USD 51 per barrel should be the decent support. Overall, the trend is typically very weak.” He advises to hang on to the short positions and sees a bit appreciation in prices.
Here is a verbatim transcript of the exclusive interview with Bharath Kumar on CNBC-TV18. Also watch the accompanying video.
Q: We have seen a new lows being made into the market here and in the US markets are yet to open. What kinds of levels are you watching considering that the US inventory data are expected to be on the higher side?
A: I think in case of crude somewhere around USD 51 per barrel should be the decent support. Overall, the trend is typically very weak. Basically, we are not seeing much change in case of dollar especially against the euro. We do not see much short covering in case of crude. So, currently just hang on to the short positions and one can expect somewhere to an extent of USD 52-51 per barrel on the lower side. I think from there we can see a bit appreciation in the prices.
Q: Do you think there could be some decline in case of gold as well?
A: In case of gold it’s typically sideways; it’s not getting much cue from the currency and even crude because crude is already trading at USD 55 per barrel to USD 51 per barrel range. So, in case of gold one should wait for the breakout above USD 760/oz and in MCX somewhere around Rs 11950/10 gm ranges and then open fresh long positions. But currently, one can just hang on to the long positions maintaining trailing stop losses below Rs 11,700/10 gm unless it goes below Rs 11700 I do not think much selling should be seen in the market. So for long positions, just hang on with stop losses below Rs 11,700/10 gm.
Q: In the international market where do you see a support coming in case of gold prices because we have seen USD 730/oz hold in recent days?
A: I think USD 730/oz is a fantastic support so somewhere around USD 730/oz one can open fresh long positions but of course USD 724/oz is the key support for the market. Unless it doesn’t give away, I think it is just heading the world’s upside but the breakout is very much required which will negate from the currency front. So, if it closes above USD 770/oz I think it is trading towards USD 800/oz.
Q: How do you play silver at USD 9.5/oz?
A: For silver, one can just hang on to the long positions because even on MCX, Rs 16,000/kg is acting as a very good support. But like in case of gold even in case of silver also I think it is just waiting for close above USD 9.80/oz and then afterwards we can see appreciation in the prices then afterwards we could see an appreciation in the prices to the extent of USD 11.2-12/oz so for silver just hang on to the long positions.
Unless it closes below USD 9.18/oz, I do not think there is much hampering in case of the supports. So, I think one should hang on to the long positions.
Q: Base metals is one area that has seen a constant decline and there is no rally coming or support coming into that market, we have seen Shanghai decline today, LME (London Metal Exchange) prices at this point in time are nearly 2-4% on the lower side. Copper then has made a new low yesterday at USD 3,500/tonne just near about those levels are you looking at more weakness? Do you think USD 3500/tonne would breach in case of copper?
A: I think it is littlie bit expected but the market is in oversold situation. So, we may see a little bit of short covering in near period of time but there are no clear signals of short covering happening in the markets even on MCX. I do not think there is much short covering seen in the market. But if the market trades above Rs 196/kg on MCX, I think short covering will be seen in the market even on LME somewhere above USD 3,750/tonne range short covering should be seen in the market. So just hang on to the short positions maintaining trailing stop losses, fresh short positions the risk reward is not matching at the current levels.
