Commodity Outlook
Metals and Energy Outlook:
Gold:
Reports show that the US economy in the second-quarter grew at a slower pace than in the previous quarter, which resulted in higher demand for gold. Gold was marginally up at $1184.40/oz in Asia and may gain its safe haven status as reports showed that Chinese manufacturing activities expanded at the slowest pace in 17 months, which could revive concerns of slower world economic growth. However, the effect of lowering manufacturing activities in China was not seen on Asian equities and was offset by strong earnings release by Japanese companies. The US dollar also looks weak as ISM manufacturing and ISM prices are showing a dip from their prior levels, suggesting a fall in manufacturing activities in the US. The US economy is still a worry for investors, which could revive the demand for gold as safe haven. Moreover, bullion may also rise on speculation that recent price fall will spur both investment and physical demand. Supports are seen at 17700 to17550 and Resistance at 18250.
Silver:
Silver was able to regain some of its lost grounds and minimized its losses in July. Silver is taking cues from weak dollar and firm bullion prices. Moreover, LME’s base metals are also trading with significant gains, which are driving silver prices higher. Asian equities are trading on firm note with gains hovering above 1%, despite reports of lower manufacturing activities in China and a tepid performance on Wall Street on Friday. Japanese companies reported stronger earnings, which are actually driving equities in Asia. However, one has to remain cautious about Chinese equities as the same may see some impact of lower manufacturing activities. Overall, silver may track gold and other base metals and move up higher. Supports are seen at 28500-28350 and Resistance is seen at 28750-28900-29150.
Copper:
Copper is closely linked with economic growth prospects since it is extensively used in industry and construction activities. Even though weak Chinese manufacturing data and US GDP data show sell signal for base metals, investors are eyeing the growing Chinese requirements, the world’s largest raw materials consumer who is a driver of base metals prices and likely to continue its lead for the coming years. We see 3-5 % upside in base metal prices in the next few weeks. The Base metal complex is also rising on chart-based buying and taking cues from global equity and currency markets. The MCX Aug2010 Copper future prices extended gains by 1.4 percent after touching a 14-week high of 343. Copper may test 360 levels again in the next few weeks. Support is seen at 339-336 and Resistance is seen at 340-345-353 ranges.
Crude:
During this week, US Data releases are expected to be in negative and mid week data releases are expected to show a positive development for US economy. Hence, prices may trade flat beginning of the week and thereafter can improve if the US data supports the price trend. Crude oil fundamentals like higher inventory, higher refinery utilizations might give a negative pressure on oil prices for the coming days. Can sell Crude on week high for profit booking and pick at lower levels. Support is seen at 3650 and 3634. Resistance at 3675, and a move above 3675 could see prices testing 3693-3710.
