GENERAL MARKET CONDITIONS

The earthquake in China should result in greater demand for base metals as the counties which are affected will need to restore power and other essential supplies. At the beginning of the year China experienced the worst snowfall in over fifty years and now the earthquake. This time around the damage was less as population density in affected areas was less. Once the actual damage to the Chinese infrastructure is known, it will be easy to identify incremental demand for base metals from China. Aluminum and steel will get the maximum boost due to demand from power transmission and construction sectors. Other base metal demand will rise but not as much.

The US dollar has weakened ahead of the April retail sales numbers. The cable has gained and pared some of its losses but is still not out of the woods. Expectations that the inflation factor will prevent the bank of England from cutting interest rates in the future is supporting the UK currency from a sell off. It needs to close over 1.9607 against the greenback on Friday to be in a medium term bullish zone. A close below 1.9607 on Friday will result in 1.9176 over the next few months. The Bank of England was the first central bank (among developed nations) to start raising interest rates in 2006 and is also the first central bank (after the federal reserve) to start cutting interest rates. The Bank of England has always acted fast to balance inflation and growth as opposed to other central bankers which are biased on either side. As a result the sterling has always moved in one direction for a few months and changes the direction. If one is able to identify the direction, it is one of the easiest currencies to trade.

COPPER -- JULY FUTURE

As long as $359 holds in the short term downside will be limited and copper can target $397 and $407. A consolidated fall below $359 will result in short term bear phase to $330.

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safe trade calls

GOLD

book profit on buy abv 11935, for the day buy only abv 12025 S/L 12000 and T/p 12060-100/12150/towards 12250 OR sell below 11825 S/L 11845 and T/p 11760-725/11680-625/down rally (any time close above 12010/12300-400/ 13100/13425 bullish while close below 11525/11150/11000-10925 bearish for medium term)

SILVER

for the day buy only abv 23675-700 S/L 23600 and T/p 23800-825/24000 towards 24200/anytime sustain close above 24500 bullish rally test 25500-26000 in days to come OR sell below 22900 S/L 22990 and T/p 22800-775/ 650/550-475/22300/down rally (any time close below 22770-300/21575-500/ 20400/19250/18775 bearish rally while close above 23750/24500/26300/27700 bullish for medium term)


CRUDE

book profit on buy abv 4875/5000/5110/ 5160-180, for the day sell only below 5180-70 S/L 5200 and T/p 5140-30/5090 -70 towards 4875 atleast in days to come OR buy only abv 5285-5300 S/L 5270 and T/p 5335-60/5390 (now crude need to close above 5300 for bullish rally while close below 5070/4850/4695/ 4475/4365/4260/4080/3960-3905 bearish for medium term)


COPPER


book profit on buy abv 344, for the day buy only abv 347 S/L 345.5 and T/p 349-350.5/uprally towards 353.5/356-358.5/361.5/bullish OR sell only below 340 S/L 341.3 and T/p 338-336/34/32/ 330/down rally sharp (upside strong rally only on close above 361.5 while close below 336/330-326.5/310 bearish for medium term)


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comex gold intraday

Gold Outlook




Gold prices finished marginally lower yesterday, along with oil which retreated from the record high levels. Vulnerability of the dollar limited the losses of the bullion.



International spot gold traded in the range $889.10 - $877.45 and last quoted at $881.90 ($883.90).



Dollar extended losses against the Euro. Renewed credit market concerns weigh on the greenback. American International Group, the world's biggest insurer had posted its largest ever quarterly loss. The result dimmed the optimism about the recovery in the economy despite data showing the U.S. trade deficit narrowed in March.



The Euro strengthened against the dollar after the European Central Bank announced the decision to keep its interest rate unchanged in its policy meeting last week. The ECB decided against a rate cut giving due consideration to the high inflation, which is currently above the target rate.



But a release from Eurostat last week had shown Euro zone retail sales fell 0.4 percent in March from February, down 1.6 percent year-on-year.



In a slightly positive signal from the Labor sector, the initial jobless claims in US fell by 18,000 to a seasonally adjusted 365,000 in the week ended May 3, according to the release by US Labor Department.



The Labor Department had reported last week that the productivity of the US non-farm business sector rose at a 2.2% annual rate during the first months of the year.



Unexpectedly strong data from the US Service sector also underpin the dollar. According to the data released early last week, the ISM's non-manufacturing index rose to 52.0% in April from 49.6% in March.



But a report from National Association of Realtors showed that pending home sales in the US fell 1.0% in March, an indication of continuing weakness in the housing market.



Oil price softened after touching a fresh high of $126.40 a barrel, due to profit taking from the recent rally. Global supply concerns have been the main driver of oil price in the recent weeks.



But the weekly update from the US Energy Department’s Energy Information Administration said crude supplies rose 5.7 million barrels to 325.6 million for the week ended May 2.



Crude oil June in NYMEX traded in the range $126.40 - $123.70 and closed at $123.76 ($125.96).





Medium term outlook (Spot Gold)

Weak below $881; supports are $872, $861, $849, $835, $817, $800; resistances $896, $906, $926.



Last day DGCX Gold June traded in the range $889.20 – $879.00 and closed at $883.70 ($887.50).


DGCX Gold June

TECHNICAL OUTLOOK (Intra-day)

GOLD (June) - Bullish above $ 886; bearish below $ 881

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basemetals intraday

Base Metals




Major Economic Data:

The British Chamber of Commerce said that the economy is getting worse and called on the Bank of England to lower the interest rate to help out. The U.K.'s Office for National Statistics said that producer prices were up 7.5% in April from a year ago, the biggest gain in 22 years. The June British pound is steady to higher.

An index of new house prices in Canada was up 6.1% in March from a year ago, down slightly from February's gain.

Industrial production in India was up 3.0% in March from a year ago, weaker than expected and the slowest gain in six years.

Consumer prices in China were up 8.5% in April from a year ago, more than the government wants. In an effort to cool the economy down, the People's Bank of China raised the reserve requirement from 16.0% to 16.5%, the fourth increase this year.

Copper

Copper rebounded after the dollar erased earlier gains, renewing speculation that investors will buy the metal as a hedge against inflation. MCX Copper June rose towards high of 346.70 trading volatile for the day, market was supported by bullishness in Bullion and energy prices while weakness in Indian Rupee supported the move mostly.

The dollar was little changed against a basket of six major currencies including the euro and yen after earlier rising by as much as 0.7 percent. Before today, copper had gained 22 percent this year as the U.S. Dollar Index dropped 4.8 percent, boosting the appeal of raw materials as a store of value.

China's imports of copper and copper products stayed strong in April even as record overseas prices made buying unprofitable and rising production added to domestic supplies. Imports were 246,119 metric tons in April, the Beijing-based customs office said today in a statement on its Web site, citing preliminary data. Purchases were 240,634 tons in March and 304,672 tons in April last year, according to Bloomberg data.

Copper warehouse stock at LME, net change was 375 MT to 121650 MT

MCX Copper June - Technical Outlook:

The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 9-day EMA. The downside closing price reversal on the daily chart is somewhat negative.

Market is expected to remain positive and the resistance is seen at 348.1 levels. If market breaches 348.1 may see prices to take further upside towards 351.5 and 356.4, However if it holds back below 339.8 may see prices to fall further on today. Major support is seen at 334.9 and 331.5

Recommendations-MCX Copper June: Buy at 344 Target 348 and 351 Stop loss at 341.50



Nickel

MCX Nickel may mostly traded up on short covering and bullish move at LME; market was supported by inventory data at LME and higher Bullion and energy prices. While Increasing Copper prices and weakness in Indian Rupee mostly supported higher prices.

Jindal Stainless Ltd.,India's biggest producer of the alloy, and PT Aneka Tambang agreed to invest $700 million to set up a nickel-smelting and stainless steel facility inIndonesia.

Nickel warehouse stock at LME, net change was -786 MT to 50112 MT


MCX Nickel May -Technical Outlook:

The daily stochastics have crossed over down which is a bearish indication. The stochastics indicators are decreasing from overbought level, which is bearish and should support lower prices. The market's short-term trend is negative as the close remains below the 9-day EMA. The upside closing price reversal on the daily chart is somewhat positive.

Market is expected to remain negative and the support is seen at 1106.2 If market breaches below 1106.2 may see prices to take further correction towards 1095.8 and 1085.7, However if it holds back above 1126.7 may see prices to rise further on today. Major resistance is seen at 1136.8 and 1147.2

Recommendations:MCX Nickel May: Sell at 1120-23 Target 1095 and 1080 SL 1138



Zinc

MCX Zinc May traded strong and was up by almost 2% following Copper and Nickel at LME, while move was mainly supported higher Bullion and Energy prices, although weakness in Indian Rupee also played a major role in strong metal prices.

Production at Anglo American Plc's Skorpion Zinc mine in Namibia has been halted as a strike over salaries entered a third day, the Namibian Broadcasting Corp. reported, citing the Mineworkers Union of Namibia. The mine has begun hiring contractors to replace the striking workers, the Windhoek-based broadcaster said, citing Joseph Hengari, general secretary of the labour union.

Hindustan Zinc Ltd., India's largest producer of the metal, lowered lead prices by 3.7 percent. Zinc prices were kept unchanged at 98,500 rupees a ton.

Zinc warehouse stock at LME, net change was -275 MT to 125475 MT



MCX Zinc May -Technical Outlook:

The daily stochastics have crossed over down which is a bearish indication. The stochastics indicators are decreasing from overbought level, which is bearish and should support lower prices. The market's short-term trend is negative as the close remains below the 9-day EMA. The upside closing price reversal on the daily chart is somewhat positive.

Market is expected to remain positive and the resistance is seen at 91.9 levels. If market breaches 91.9 may see prices to take further upside towards 93.8 and 94.7, However if it holds back below 89.2 may see prices to fall further on today. Major support is seen at 88.3 and 86.4

Recommendations-MCX Zinc May: Sell at 92.10 Target 89.50 and 88 SL 93.50



Lead

MCX Lead May shown a small short covering after a recent fall from 120.40 levels, movement was positive almost by 3.5%. While move was mainly supported higher Bullion and Energy prices, although weakness in Indian Rupee also played a major role in strong metal prices.

Hindustan Zinc Ltd., India's largest producer of the metal, lowered lead prices by 3.7 percent. The price was decreased by 4,500 rupees to 117,200 rupees ($2,815) a metric ton starting May 8.

Lead warehouse stock at LME, net change was 0 MT to 58600 MT



MCX Lead May -Technical outlook:

The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is negative as the close remains below the 9-day EMA. The upside closing price reversal on the daily chart is somewhat positive.

Market is expected to remain positive and the resistance is seen at 96.8 levels. If market breaches 90.5 may see prices to take further upside towards 99.2 and 102.4, however if it holds back below 91.2 may see prices to fall further on today. Major support is seen at 88.0 and 85.6

Recommendations –MCX Lead May: Sell at 95 target 93 and 91.50 SL 95.80



Aluminium

Aluminium traded strong with Aluminium inventory out at LME, while move was mainly supported higher Bullion and Energy prices, although weakness in Indian Rupee also played a major role in strong metal prices.

Aluminium smelters in China's Sichuan province, hit by a magnitude-7.8 earthquake today, have reported little damage to production, said Wan Ling, an analyst with metals and mining researcher CRU International Ltd.

China, the world's largest aluminium consumer, exported 71,024 metric tons of the light metal and its alloys in April, the country's customs office said, citing preliminary data. Exports were 58,459 tons in March and 50,850 tons in April last year. Imports of aluminium and its products rose to 87,164 tons in April, the customs office said. Imports were 76,803 tons in March and 79,726 tons in April last year, according to Bloomberg data.

Alum warehouse stock at LME, net change was -1475 MT to 1035625 MT



MCX Aluminium May -Technical outlook:

The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 9-day EMA. The downside closing price reversal on the daily chart is somewhat negative.

Market is expected to remain positive and the resistance is seen at 122.4 levels. If market breaches 122.4 may see prices to take further upside towards 123.6 and 125.7, however if it holds back below 119.1 may see prices to fall further on today. Major support is seen at 117.0 and 115.8

Recommendations–MCX Aluminium May: Buy at 120 Target 122.50 and 124 SL 119.05

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