WEEKLY COMMODITY TECHNICAL REPORT 02 DECEMBER TO 06 DECEMBER 2013
Gold: China emerges as top global consumer.
China continues to be the largest consumer of largest varieties of commodities produced in the world; and as 2013 draws to a close, the dragon country is going to be the top global consumer of the hottest and most valuable commodity: gold. Latest data from the World Gold Council says that China is set to beat India as the biggest consumer of gold as the Chinese demand for gold in 2013 is forecast to be a whopping 1,000 tonnes. For several decades, India used to be the world’s largest gold consumer with Indians buying anything between 600 to 800 tonnes of the bullion metal every year. Indians continue to buy gold despite the economic recession that is prevalent in the country; but the Chinese buying spree seems to be fast overtaking India. According to the Gold Council data, China’s demand for jewellery, bars and coins rose 30 per cent to 996.3 tonnes in the year to September. But in India, the largest gold consumer so far, gold consumption increased only by 24 per cent to touch 977 tonnes .The report says that Mainland Chinese themselves bought 147.9 tonnes of gold in October month, including scrap gold, compared with 116.3 tonnes in September. The gold consumption was three times higher than the 47.5 tonnes last year. In October, China imported a whopping 131 tonnes of gold from Hong Kong alone.
Crude oil futures slip lower, but remain near 3-week highs.
Crude oil futures slipped lower during early European trading hours on Friday, but remained within close ranged of a three-week high following the release of positive U.S. economic reports on Thursday, while talks with Iran continued. On the New York Mercantile Exchange, light sweet crude futures for delivery in January traded at USD95.18 a barrel during European morning trade, down 0.28%. The January contract settled up 1.69% at USD95.44 a barrel on Thursday. Oil futures were likely to find support at USD93.47 a barrel, Thursday’s low and resistance at USD96.64 a barrel, the high from November 1. Oil prices found support on Thursday after preliminary data showed that U.S. manufacturing activity improved to an eight-month high of 54.3 in November from a reading of 51.8 in October. A separate report showed that the number of people filing for initial jobless benefits last week fell by 21,000 to a seasonally adjusted 323,000, beating expectations for a decline of 9,000. However, data also showed that manufacturing activity in the Philadelphia-region expanded at the slowest pace in six months in November. Elsewhere, on the ICE Futures Exchange, Brent oil futures for January delivery fell 0.26% to trade at USD109.79 a barrel, with the spread between the Brent and crude contracts standing at USD14.61 a barrel.
China Copper market buoyant, boosted by scrap substitution.
China copper market remains buoyant due to a combination of scrap shortage and stock building. China copper demand appears very positive in 2013 and more traders want to book higher contract tonnages in 2014 thanks to increased import financing. Refined copper production is also expected to show strong growth.
China stock build up is also a driver of copper demand. Estimates range from 100-300 kt. We believe the build has occurred in both unreported stocks held by traders and a one-off working inventory pipeline fill. Substitution out of scrap and into cathode has had a bigger impact on demand than we had previously factored in. Scrap supply has been very tight this year, especially in China where imports have shrunk 10% y/y YTD. Subsequently semis producers have been using more cathodes and less scrap in their raw material mix.
There has been resurgence in copper import financing driven by tighter monetary conditions. Financing costs are now the most attractive since the beginning of 2012. Recently, banks have also begun to allow entrecote financing again, which could lead to builds in bonded stocks into the year-end. Bonded stocks have risen from a low of 425Kt in July to 500-550Kt currently.
MCX GOLD Technical Trend
MCX GOLD on its daily charts showed sideways to bearish movement due to comex weakness and closed around the upper band of triangle pattern. If it able to break 29650 then breakout of triangle pattern on higher side is expected and it may find resistance around 30000-30700. On other hand if it maintains on lower level then 28950 will act as major support.
Better strategy in MCX GOLD is to buy above 29650 for the target of 30650 with stop loss of 28900.
SILVER Technical Trend
MCX SILVER last week showed bearish movement, took reversal from lower band of falling wedge pattern. Now, if this bear trend continues and sustain below 45000 then it may find next support around 43500. On higher side upper band of falling wedge pattern will act as resistance for it and 47500 is major resistance above which breakout on higher side is expected.
Better strategy in MCX SILVER at this point of time is to buy above 47500 for targets of 49150-50000, with stop loss of 45000.
MCX CRUDEOIL Technical Trend
Crude oil on its daily chart showed sideways movement from past five consecutive weeks and range bound movement in between 6110-5750. Now, if it is able to sustain below 5750 then next support level is seen around 5570. On higher side 6110 will act as important resistance, only above which bulls can become active.
Better strategy in MCX CRUDEOIL is to sell below 5750 for the target of 5570 with stop loss of 6000.
MCX COPPER Technical Trend
MCX Copper moved in downward channel pattern found support near lower band and traded in between 457-447. Now, if it sustain above 457 then it may find resistance around upper band i.e. 463 closing above it indicates breakout of channel pattern and will find strong resistance around 471. Below 447 again it may drag towards lower band around 434.
Better strategy in MCX COPPER is to buy above 457, with stop loss of 445 for the targets of 465-470.
Source : Trifid Research Pvt Ltd.