Commodities Outlook; Gold up on US interest rate outlook – KASB and AHC Research
By: Junaid Pervaiz,
KASB Securities Limited
+92 21 111 222 000
Gold prices continue to extend its rally after US Fed minutes: Gold prices continue to gain for the third day, posting fresh highs for the week, after the US Fed meeting minutes indicated that officials were not keen on increasing interest rates any time soon. However, lack of physical demand of gold combined with low fund flows can curb the rally in the short-term. Gold prices were under pressure last month after the US Fed Chairperson suggested that the US Central Bank may end its massive bond buying program this fall and could start raising interest rates shortly thereafter.
Crude oil all set to post a weekly gain on increasing fuel demand: Crude prices are headed for a weekly gain amid speculation that US fuel demand will increase as employment recovers. US jobless claims fell by 32,000 to 300,000 last week, the lowest level since May 2007. Additionally, gasoline demand has increased to 1mn bpd, the highest in three months.
Gold Spot: Play the range
We recommend playing the range of US$1,314 – US$1,325. A break below US$1,314 can target US$1,305 (20 – DMA); while a break above US$1,325 can target US$1,334 (50% retracement of US$1,277 – US$1,392).
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$19.59 (Weekly low).
WTI Spot (Crude Oil): Sell on Strength
We recommend selling on strength below US$103.80 targeting US$102.53 (5 – DMA), with stops above US$104.50.
By: Arif Habib Commodities
Gold was trading near its highest in 2-1/2 weeks on Friday, on track for its best week in a month on weaker equities and growing hopes the U.S. Federal Reserve would hold off on raising interest rates. Fed’s March meeting minutes showed that policymakers were not keen on increasing interest rates straight after the wind-down of bond purchases. Prices could be at risk of losing momentum as outflows from gold funds continue and physical demand in Asia remains weak. Outflows from SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, slowed on Thursday to about 0.26 tons,
compared with 2.70 tons earlier in the week.
U.S. crude futures eased on Friday in early Asian trade, pressured by weaker economic data from the world’s second-largest economy China and expectations of a recovery in Libyan oil exports. The Organization of the Petroleum Exporting Countries (OPEC) lowered the expected demand for its crude oil in 2014, ending a run of upward revisions to global consumption growth, and highlighted concerns over the economy and pressure on its market share.
Silver contracts show the most active months. Asian shares slumped on Friday in reaction to U.S. market woes and timid outlooks for global growth. Overnight, U.S. stocks plunged fueled by a sell-off in the technology and biotechnology sectors, as investors viewed valuations have grown. Meanwhile,Silver for May delivery was down 0.31% at $20.03 a troy ounce.
Gold: Buy On Weakness
Oil: Range Bound
Silver: Buy On Weakness