GENERAL MARKET CONDITIONS

Volatility in crude oil started to increase. Yesterday’s boom to bust of crude oil by $10 in less than ten minutes speaks for itself. In gold, silver and copper traders have gotten used to high volatility but crude oil is the new entrant. Managing volatility is the key. Stop losses are useless. Day traders need to buy at market price and sell at market price to limit losses. Bernanke and Bush did not say anything extra ordinary on the US economy. It’s only that traders and fund managers used the same book profits which resulted in a technical sell off. The trend for the US dollar is bearish. There is no doubt over the same. However if the outlook for the Eurozone economy turns cloudy (with continued fall in German consumer confidence and business sentiment), the greenback will benefit. The yen gained on expectations that the bank of Japan will raise interest rates.

Zinc pared most of its gains on doubts whether Chinese production cuts will have any impact on supplies. The current rise however will prevent traders from going too short at lower prices. The fear of a sharp rise will be in their mind. Fund managers invest only when anything is fundamentally bullish. The fundamental story for any commodity does not change overnight while the technical picture can change every hour. Zinc, it’s a fight between fundamental traders and technical traders. Crude oil has a lagging effect. Higher crude oil prices will slowdown the world. If the world slows down why should base metals rise?

We have the US inflation numbers today. At the moment it’s just a technical correction in gold, silver and crude oil. US weekly crude oil numbers will be the key. Crude oil traders will be hesitant to go short heavily as the Iranian risk premium is not over. We continue with a buy on dips strategy as long as key technical supports are holding. Gold August key support $956 and $942. Silver September key support $1848. Copper September resistance $379.10. As long as these prices are held/broken the upside/downside will be limited. As and when prices near the same it should be used to go long/short (as the case may be).

PLATINUM OCTOBER -- INTRA DAY PIVOT $2055.0

Platinum needs to break $2055 to be in a bullish zone. Till it does not break $2055, there will be sellers.

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

Failure to break 1605 will result in a fall to 1542 and 1512.


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