How to trade gold, silver and copper now?--> 28 Feb

Commodity Tips

IIFL has come out with a report on commodity with Gold, Silver and Copper.

Commodity Mantra:

Comex Gold (April)

Fundamental View: Gold continued to trade higher, as worries in the Middle East and North Africa increased safe-haven demand for gold. Geo-political worries in Libya continued as there are no signs of leader Muammar Gaddafi stepping down after 41 years in power. This led investors to flock towards gold as a safe-haven investment. Gold futures continue to track crude oil prices, slipping into negative territory as oil dipped below the USD 100 mark. Higher oil prices tend to lift inflation and slow economic growth, which in turn improves investment demand for gold, considered a hedge against both risks. The Gold Price rose further in London trade Thursday morning, hitting new 2011 highs for Dollar investors as Brent crude oil jumped to USD 119 per barrel and a raft of economic analysis warned of "stagflation" ahead for the global economy.

Technical View: Indicators continue to show neutral tendencies with RSI in the neutral zone and MACD above the zero line indicating bullishness.

Recommendation: Buy dips to USD 1,400/1,398, SL USD 1,394, TGT USD 1,408

MCX Gold (April)
Recommendation: Buy dips to Rs 21,030/21,010, SL Rs 20,930, TGT Rs 21,155

Comex Silver (Mar)

Fundamental View: The white metal raced past the Rs 50,000 level on Thursday on aggressive buying by speculators and stockists ignited by highly bullish global sentiment. The primary reason for the bullish outlook on silver is due to the continuing and increasing global macroeconomic, currency and geopolitical risks, silver’s historic role as money and a store of value, the declining and very small supply of silver, significant industrial demand and perhaps most importantly significant and increasing investment demand. Silver touched three decade highs in the global market. Silver galloped to cross the magical Rs 50,000 per kilo mark in opening trade at the bullion market here today on emergence of frantic buying by stockists and speculators sparked by a surge in global market.

Technical View: Indicators continue to show neutral tendencies with RSI in the neutral zone and MACD above the zero line indicating bullishness.

Recommendation: Buy dips to 32.35/32.15, SL 32.02, TGT 32.40

MCX Silver (Mar)
Recommendation: Buy dips to Rs 49,750/49,700, SL Rs 49,375, TGT Rs 50,225

Comex Copper (Feb)

Fundamental View: Copper saw some initial dip-buying, but broad-based weakness in regional metals and equities markets dragged down the red metal. A rebound in Chinese refined copper imports for January didn't provide much momentum, as it had been largely priced in early this month when preliminary trade data was released. London copper rose 1%, trading above USD 9,500, after dipping to its lowest in nearly a month in the previous session, and pressure remained on base metals from the economic threat posed by surging oil prices. Stronger US durable-goods data and an improving labor market helped copper to its first gain in four sessions. Better-than-expected numbers on durable goods orders and jobless claims helped snap the metal's losing streak even though US oil futures topped USD 100 a barrel amid unrest in Libya. The price of oil later fell back under the burden of robust petroleum inventories in the US, further boosting copper.

Technical View: Indicators continue to show neutral tendencies with RSI in the neutral zone and MACD above the zero line indicating bullishness.

Recommendation: Buy dips to Rs 428/427, SL Rs 425, TGT Rs 434

MCX Copper (Feb)
Recommendation: Buy dips to Rs 433.80/433.20, SL Rs 430, TGT Rs 440.

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