GENERAL MARKET CONDITIONS

Short term hot money has moved into commodities as all metals, energies and soft commodities continue to rise sharply every day. Expectations that commodities will outperform equities this year has also resulted in some long term investments coming at lower levels. The Fed cutting 2008 US growth prospects and saying that the US economy could face further setbacks even after a series of interest rate cuts also contributed to the metals rise. Gold and precious metals rises are still justified as they are a hedge against a global slowdown and dwindling value of the US dollar.

I am not a crude oil bull and higher crude oil prices will only increase the use of alternate energy and start affecting crude oil demand in the long term, In the short term crude oil prices can test $112 and $121. I still expect crude oil prices to top out next month.

We were doing a survey among our retail clients, friends, relatives and people whom we know over the past few weeks on their expectations of future gold prices. Most of them responded by saying that in the long term Indian prices will rise to INR 15,000 per ten grams. But they will wait for some more correction to invest in gold. When we told them they could invest in gold exchange traded funds (GETF), they responded by saying that they never knew of such an investment avenue and they were also hesitant to invest as they do not have a proven track record. Based on this, our conclusions are that Indian gold demand may be low at the moment, but certainly not down and out. Indian gold demand will rise and be normal as and when prices stabilize and investors get used to higher prices. There is still lack of awareness of investment in gold exchanged traded funds.

Momentum is bullish. Continue to buy on dips and looks for signs of a top being formed and then go short. Use higher stop losses and then go short.

GOLD -- APRIL FUTURE -- INTRA DAY PIVOT:$932.0

Gold is on the way to our target of $956.30 and $993 as long as $932 and $916 holds.

COPPER -- MARCH FUTURE -- INTRA DAY PIVOT: $366.0

Copper targets $382, $392 as long as $362 and $357 holds.

MCXARUN
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