GENERAL MARKET CONDITIONS

Interest rate differentials will result in a weaker US dollar in the short term after the Fed meeting yesterday. “Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased,'' the Federal Open Market Committee said in a statement. The Fed has adopted the middle of the road approach. If the US economy falters before the August meeting, then the Fed may not interest rates. On the other hand if the US economy shows strength before the next Fed meeting, they could start to speak on aggressive interest rate hikes. The European central bank chief said that “Upside risks to price stability over the medium term have intensified further over the past few months, in a context of very vigorous money and credit growth”. The ECB will raise rates in July and will focus on inflation in the third quarter. This should give the euro an edge against the US dollar in the third quarter. But whether the euro will edge past 1.60 against the US dollar, I have my doubts.

The fed meeting is over and traders and investors will start preparing for the third quarter and US Independence Day on 4th July. Base metals traders will be preparing for the expected increase in Chinese demand before the Olympics. Aluminium has scope for more gains. It will be volatile over the coming weeks. Fundamentals in Aluminium point to a sustained rise in prices in the medium term to long term. Nickel, for the traders, it is a case of once bitten twice shy as it fails to rise. The best way to trade in the third quarter is to ignore the news and trade in the technicals.

If the US dollar falls then all metals and energies will gain. Technically gold and silver are in a short term neutral zone and a medium term bullish zone. Gold is bullish over $859 and $844 in the medium term. Silver is bullish over $1600 in the medium term. If gold and silver fall/close below these levels then there will be a technical break down which can result in a 5% to 10% slide. This is the technical picture. Till the 4th July gold and silver will be torn between short term and medium term technicals. Trading strategy is to remain on the sidelines and buy on sharp dips but keep on booking partial profits.

PLATINUM OCTOBER -- INTRA DAY PIVOT $2055.0

A mild slowdown in demand has resulted in buyers shying away. This can result in a fall to $2032 & $2004.

MCX CARBON CREDIT --NOVEMBER (price in Indian Rupees)

Failure of MCX Carbon credit to break 1444 will result in a fall to 1390 and 1360 in the short term

MCXARUN
9994500540