Bullion counter can trade on volatile path on domestic bourses as stronger local currency is curbing the upside seen in the international prices. Bullion investors will closely eye the situation in Euro Zone and tensions in Middle East. Movement in dollar index and euro will also have impact on the movement of bullion counter. Gold has seen one way rally after testing USD 1,550 in international bourses and has increased nearly USD 200 at a stretch and profit booking at current levels will be seen in this week. Talks between Greece and its international lenders dragged on, with euro zone finance ministers aiming to agree on a second financing package on Monday. Gold prices can trade in range of 27,600-28,800 in MCX. While white metal silver can hover in the range of 53,000-58,500 in near term. SPDR Gold Trust, the world`s largest gold-backed exchange traded fund, holdings rose nearly half a% to 1,277.135 tonnes by Feb 2 the highest since Dec.20. Manufacturing grew from the US to India and China, fuelling optimism the global recovery is weathering the debt crisis in Europe and driving a rebound in stocks. Recently Fed has promised to keep low rates and expectations on the third round of quantitative easing have raised hopes on increasing liquidity, which also have pushed the gold higher. U.S. Federal Open Market Committee of the Federal Reserve Board decided to leave rates at 0.0% to 0.25% until late 2014.
Metal:
Base metals may trade sideways with downside bias as the euro zone crises and rise in greenback will keep the upside checked. Copper prices may trade in range of 405-425 in MCX while nickel may trade in range of 1000-1060. Factory activity rose in China, the United States and Germany in January, and the three manufacturing superpowers drove gains in global output even as Europe struggles with the fallout from its festering debt crisis. Copper premiums in Shanghai dropped below USD 100 a metric tonnes for the first time since August as inventories expand, suggesting imports that were at a record in December may ebb. Recently Federal Reserve Chairman Ben Bernanke defended the U.S. central bank`s policies against charges from Republican lawmakers that they risked sparking inflation saying the economy still needs plenty of support. Aluminum prices can trade in range of 105-110 in near term while lead can trade in range of 102-108 while zinc can hover in narrow range of 100-108. Aluminum prices ended last year near 18-month lows on concerns about economic weakness and oversupply, prompting Alcoa and Norsk Hydro to cut capacity. Rusal is also considering cutting capacity. In cooling news for lead demand, North American shipments of replacement automotive batteries slipped by 2.2% in December from November, and dropped 6.4% from December 2010.
Energy:
The sharp fall of crude oil prices on domestic bourses is expected to continue as the stronger local unit has aided in its downfall and crude oil can test 4600 in MCX. Meanwhile crude oil movement will depend on the tensions prevailing in Iran and the euro zone debt crises along with movement of greenback and Indian rupee. OPEC will increase shipments this month on rising winter demand in the northern hemisphere, according to tanker tracker Oil Movements. Organization of Petroleum Exporting Countries will ship 23.52 million barrels a day in the four weeks to Feb. 18, 1.1 percent more than the 23.26 million barrels in the period to Jan. 21. Recently tensions mount in the Middle East as Iran threatens to close the Strait of Hormuz, a major shipping route for nearly 20% of the world. Despite the apparently better economic data, U.S. oil consumption has been particularly hit by mild winter weather. U.S. gasoline consumption decreased to 7.97 million barrels a day, the lowest since September 2001. Natural gas prices have seen very volatile movement recently which is expected to trade in range of 125-145 in near term. U.S. natural gas managed to recover its initial losses in later part of the week after a government report showed a weekly inventory draw slightly above market expectations.
Spices:
Pepper futures (Feb) slowly entering in to the oversold phase, is expected to continue its move towards the bearish side; this is the time of new crop arrival. Farmers are having the crop with them and they will try to sell it after getting the information about Vietnam crop. Chilli futures (Feb) facing difficulties to sustain above 6000 levels, may trade downside as the crop is expected to be higher this year. Higher arrivals from Andhra Pradesh and a fall in exports combining together is expected to push down the prices towards 5800 levels. Moreover, the crop in China, a major competitor & producer of the high-colour low-heat variety, is reported to be good. Cardamom futures (Feb) is likely to show some range bound moves owing to mixed sentiments. Firstly, the upside will remain hammered due to strengthening of rupee, which will be trimming the gains of the exporters. On the flip side, the counter may hold above 635 levels, supported by the reason with one more round to go, the harvesting output is expected to be much lower. Turmeric futures (Apr) probably may go on with its consolidation, taking support above 4,530 levels. At the spot markets, despite heavy arrivals, prices increased due to demand from North India & buyers being interested to pay money for good quality Hybrid Salem crop. Jeera futures (Feb) is anticipated to test 14,000 levels on poor demand from Bangladesh and on increased acreage this season.
Oil & Seeds:
The phrase `nothing goes up in a proverbial straight line` is to be associated with mustard futures, as the counter is expected to show some downside moves toward 3150 levels. Weak buying interest & rise in arrivals at the spot markets is likely to be the factors contributing to these bearish sentiments. Mustard seeds with 15% moisture content are quoting at 2,350/qtl, while dry mustard seeds quoted at Rs 2,750. Refined soy oil futures (Feb) is seen heading towards 655 levels. The factor adding to the downside is the co-relation with crude oil prices. In the current scenario, crude oil prices are at a six-week low below USD100 a barrel on a combination of falling demand and resulting rising inventories. Adding to this, rupee appreciation brings jovial time for importers, wherein they can make cheaper imports, making more quantity available to the market. Soybean futures (Feb) is likely to shed towards 2,380 levels owing to weakness in the oil seeds complex & mixed sentiments prevailing at the spot markets. Buyers are anticipating prices to ease while sellers are reluctant to off-load their stock at the lower quotes. Besides, the appreciation of the rupee against the US dollar has begun to hurt oil meal exports. On the international platform, U.S soybean futures may remain locked within the territory of 1160-1240 levels. Gains will be limited by improved weather conditions in Argentina and Brazil while the downside may remain capped with buyers energizing of fresh Chinese export demand.
Commodities:
Sugar futures (Feb) sustaining above 2,920 levels is expected to give some profits to those who are fond of this counter. We will definitely see an impact of the outcomes from the meeting of Empowered Group of Ministers (EgoM) headed by Finance Minister Pranab Mukherjee, scheduled to meet on February 7 to discuss further on sugar exports. Potato futures (Mar) is likely to hold above 680 levels, the reason being that in Punjab the harvesting normally starts around January 24-25, but just because of rains in recent days, it has been delayed by 10 days. Moreover, according to the Confederation of Potato Seed Farmers, crop loss may stand between 20-30%. Kapas futures (Apr) shedding more than 16% from its contract high of 1016 levels, may trade range bound taking support above 845 levels. With the changing times of demand from garment & textile industries, cotton is slowly loosing its attractiveness, facing a substitution effect from linen. The later has a higher moisture absorption capacity as compared to cotton and natural anti-bacterial and ultra-violet protective qualities. As regards guar complex, cautious bullishness is the best phrase could be used to describe these counters. A range bound move carrying some bearish sentiments of profit booking from higher levels may trap their respective gains, keeping them below their recent high price levels. Moreover, exporters & millers are refraining themselves from fresh buying at such higher prices.
