Commodities Outlook; Commodities higher on rising unrest in Ukraine – KASB and AHC Research
By: Junaid Pervaiz,
KASB Securities Limited
+92 21 111 222 000
Gold nears two week high on safe haven demand: Gold traded to its highest level in two weeks on rising tensions in Ukraine and increasing physical demand from China. However, money outflow continues from gold backed exchange traded funds suggesting that price gains may be short lived. Market participants will be focusing on the FOMC meeting minutes expected today to gauge the strength of US economy.
Crude gains on Ukrainian crisis overshadowing US data: Crude prices rallied above US$102bbl as geopolitical tensions over Ukraine worsened, overshadowing API (American Petroleum Institute) report that showed crude stockpiles in the world’s largest oil consumer rose nearly six times more than expected. US secretary John Kerry accused Russia of stirring separatist unrest in eastern Ukraine. Investors are also watching developments in Libya and the progress in the country’s plan to ramp up exports..
Gold Spot: Buy on Weakness
We recommend buying on weakness above US$1,307 targeting US$1,320 (38.2% retracement of US$1,277 – US$1,392), with stops below US$1,298 (200 – DMA).
Silver Spot: Buy on Weakness
We recommend buying on weakness above US$19.80 targeting US$20.28 (61.8% retracement of US$19.06 – US$22.16) with stops below US$19.62 (Last week’s low).
WTI Spot (Crude Oil): Buy on Weakness
We recommend buying on weakness above US$101.45 targeting US$102.60 (Upper Bollinger), with stops below US$100.93(10 –DMA).
By: Arif Habib Commodities
Gold was trading near its highest in two weeks on Wednesday, bolstered by signs of increasing demand in China and as rising tensions over Ukraine burnished its safe-haven appeal. But investors continued to pull money out of gold-backed exchange-traded funds, raising the risk that price gains could be short lived. U.S. Secretary of State John Kerry accused Russian agents and Special Forces of stirring separatist unrest in eastern Ukraine saying Moscow could be trying to prepare for military action as it had in Crimea. Holdings in SPDR Gold Trust, the world’s largest gold-backed ETF and a good measure of investor sentiment, fell 2.7 tonnes to 806.48 tonnes on Tuesday. The fund has not seen any fresh inflows since March 24. Moreover FOMC will be releasing the detailed record of the FOMC’s most recent
meeting, providing in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates earlier at 11:00pm (PST)
U.S. crude oil futures slipped in early Asian trade on Wednesday after jumping more than 2 percent in the previous session, but prices remained underpinned by a U.S. stock draw for gasoline and tensions over Ukraine. U.S. crude stocks rose more than expected last week while gasoline inventories decreased and distillate stocks increased, data from industry group the American Petroleum Institute (API)showed on Tuesday. Crude inventories rose by 7.1 million barrels in the week to April 4, compared with analysts’ expectations for an increase of 1.3 million barrels. Gasoline stocks fell by 3.6 million barrels, compared with analysts’ expectations in a Reuters poll for a 700,000-barrel decline. The U.S. Department of Energy’s Energy Information Administration (EIA) will release its data today at 1430 GMT, i.e. 7:30pm (PST).
European stocks were higher on Wednesday, as investors eyed the Federal Reserve’s upcoming policy statement due later in the day and as comments by the International Monetary Fund on Tuesday continued to support. The dollar recouped some ground against the yen on Wednesday, following the previous session’s steep losses, but remained close to three-week lows against a basket of major currencies. Elsewhere on the COMEX, silver for May delivery was down 0.14% to $20.03 a troy ounce.