GENERAL MARKET CONDITIONS

The European central bank has shifted its focus from inflation to growth after it acknowledged that the Eurozone will be affected by a slowdown in the US economy. Bank of England and Fed interest rate cuts will only prevent investors from investing in equities. If the investor cannot invest in equities, bond yields are too low to invest as they do not cover inflation, real estate prices are volatile, emerging market equities provide cheap valuations at the current prices but are volatile, then where should he park his money? My answer is only commodities which include a balance between soft commodities, precious metals and base metals. If investment in commodities rises, gold will rise and will detach itself away from the movement in the currency markets.

Gold and silver will be volatile for the rest of the day. Silver and copper should outperform gold. Crude oil is finding buyers at higher levels. It remains to be seen whether traders will square off their positions over the weekend or go long. Base metals should rise further as there is a technical break out. Zinc, its better to remain on the sidelines as there are huge longs at higher levels and investors are also averaging at lower levels.

GOLD -- APRIL FUTURE -- INTRA DAY PIVOT:$898.0

As long gold holds $897 it will target $924 and $942 once again. Gold has to fall below $897 for further losses to $887 and $872.0

COPPER -- MARCH FUTURE -- INTRA DAY PIVOT: $336.60

As long as copper holds $336 it will target $360.50 and $372 in the short term. LME copper 3 months can rise to $7900 if it holds $7425.

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LONG VIEW

GOLD
LIKELY TO TEST 11725-800 WITH ANY BREAK & CLOSE ABOVE 11650(FEB)

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SILVER
LIKELY TO TEST 22000 UPTO 22500 WITH ANY BREAK & CLOSE ABOVE 21600, ONLY CLOSE BELOW 19850-700 DOWN TREND AGAIN(MAR)

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for safe trade follow this

GOLD

For the day buy only abv 11550 S/L 11530 and T/p 11585-600/11670 upto 11775 in days to come OR sell below 11400-380 S/L 11420 and T/p 11340-300/250/175-50 upto 11000 days to come (any time close above 11600/ 11875 bullish while close below 11300/ 10950-900/10500/10050/9850/9575 bearish for medium term)

SILVER

book profit on sell recm ard 21390-400, for the day buy only abv 21400 & 450 S/L 21330 and T/p 21550-625/abv 21650 test 21800 OR sell below 21150 S/L 21225 and T/p 21075-25/20950 upto 20800 (any time close below 19725/ 19375/19000/18625/18250/18100/ 17750/17050/16450 bearish rally while close above 21650/22000/23150 bullish for medium term)

CRUDE

for the day sell below 3420 S/L 3440 and T/p 3400-3385 upto 3310 in days to come OR buy only abv 3500-3510 S/L 3485 and T/p 3540-45/3570/3610/3640/ uprally (now crude need to close above 3570/3640/ 3700/3840/3910-35 for bullish while close below 3380/3290-60 bearish for medium term)

COPPER

for the day buy only abv 289 & 290 S/L 288 and T/p 292-93/bullish rally test 298 -300 atleast OR sell only below 283 S/L 284.3 and T/p 282.5-281/280-278/ bearish rally test 272-73 atleast (upside strong rally only on close above 290-93/ 299/314/ 321.5/327/331.5/348 while close below 278/270/265/250/235 bearish for medium term)

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bullion chart

this is MCX Gold day chart
click the chart to enlarge



this is MCX Silver day chart
click the chart to enlarge



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U.S. Energy Futures

Crude Oil:

Front month crude oil is higher in ACCESS trade this morning reversing the weaker tone seen during the prior session. Trend indicators are indicating a bearish market and the overall strength of the trend is strong, as indicated by the ADX. Momentum readings are also in bearish territory.

TREND INDICATORS:

Simple Moving Average (10-Day): Recent activity this morning has seen prices trade below this moving average. However, even though prices are trading below the moving average, the moving average slope is up from the previous session. Should prices continue lower the moving average will eventually follow and then the down trend will be more clearly established. However, this strength in the moving average will need to be watched. As a result the 10-Day simple moving average has a weak bearish bias.

Simple Moving Average (25-Day): Recent activity this morning has seen prices trade below this moving average. Also, the slope of the moving average is in a downward slope from the previous session indicating further weakness. As a result the 25-Day simple moving average has a strong bearish bias.

Simple Moving Average (50-Day): Recent activity this morning has seen prices trade below this moving average. Also, the slope of the moving average is in a downward slope from the previous session indicating further weakness. As a result the 50-Day simple moving average has a strong bearish bias.

ADX: The Average Directional Change (ADX) indicates the strength of a markets underlying trend. A rising ADX is interpreted as building trend strength, while a falling ADX indicates weakness in the underlying trend and the potential of a market reversal. On this market, the 14-Day ADX is rising, while the long term trend, based on a 50-Day moving average, is down. As the ADX is rising this indicates that the current trend is strong and should remain intact. Look for the current trend to continue.

MOMENTUM INDICATORS:
MACD: The MACD is in bearish territory.

RSI: The 14-Day RSI is in neutral territory. (RSI is at 42.05). This indicator issues bullish signals when the RSI line dips below the oversold zone (currently set at 20.00); a bearish signal is generated when the RSI rises into the overbought zone (currently set at 80.00). Nevertheless with the RSI at 42.05 the market is somewhat oversold. However, this by itself isn't a strong enough indication to signal a trade. Look for additional evidence of strength from this indicator before getting too bullish here.

VOLATILITY INDICATORS:

Bollinger Bands (20-Day Average +/-1 Standard Deviation): As prices are closer to the bottom band than the top band, the Bollinger Bands are indicating oversold prices. Volatility also appears to be decreasing, as evidenced by a smaller distance between the upper and lower bands over the past few sessions. Despite this oversold condition the market may become more oversold before turning higher. As a result, the market will look for additional strength in prices before turning bullish on this indicator.

RESISTANCE AND SUPPORT LEVELS:

100.09 - Highest High in last 50-Days
95.07 - 20-Day Simple Moving Average Plus 2 Standard Deviations
92.99 - 20-Day Simple Moving Average Plus 1 Standard Deviation
92.71 - Highest High in last 10-Days
92.25 - 25-Day Simple Moving Average
92.07 - 50-Day Simple Moving Average
90.29 - 10-Day Simple Moving Average
90.01 - 100-Day Simple Moving Average
89.05 - 3-Day Simple Moving Average
88.83 - 20-Day Simple Moving Average Minus 1 Standard Deviation
88.75 - High
88.72 - Last Price
87.40 - Low
87.01 - Lowest Low in last 10-Days
86.75 - 20-Day Simple Moving Average Minus 2 Standard Deviations
85.42 - Lowest Low in last 50-Days
80.04 - 200-Day Simple Moving Average

Natural Gas:

Natural Gas contracts are higher this morning extending the prior sessions gains. Trend indicators are indicating a bullish market. However the overall strength of the trend, as indicated by the ADX, is weak and should be watched as a result.

TREND INDICATORS:

Simple Moving Average (10-Day): Recent activity this morning has seen prices cross above this moving average. Also, the slope of the moving average is in an upward slope from the previous session indicating further strength. As a result the 10-Day simple moving average has a strong bullish bias.

Simple Moving Average (25-Day): Recent activity this morning has seen prices cross above this moving average. Also, the slope of the moving average is in an upward slope from the previous session indicating further strength. As a result the 25-Day simple moving average has a strong bullish bias.

Simple Moving Average (50-Day): Recent activity this morning has seen prices trade above this moving average. Also, the slope of the moving average is in an upward slope from the previous session indicating further strength. As a result the 50-Day simple moving average has a strong bullish bias.

ADX: The Average Directional Change (ADX) indicates the strength of a markets underlying trend. A rising ADX is interpreted as building trend strength, while a falling ADX indicates weakness in the underlying trend and the potential of a market reversal. On this market, the 14-Day ADX is falling, while the long term trend, based on a 50-Day moving average, is up. However, the weak ADX indicates that the current trend is deteriorating and may possibly reverse. Look for choppiness ahead.

MOMENTUM INDICATORS:
MACD: The MACD is in bearish territory. However, the recent upturn in the difference between the MACD and the MACD signal line may indicate a short term rally over the next few days.

RSI: The 14-Day RSI is in neutral territory. (RSI is at 54.57). This indicator issues bullish signals when the RSI line dips below the oversold zone (currently set at 20.00); a bearish signal is generated when the RSI rises into the overbought zone (currently set at 80.00). Nevertheless with the RSI at 54.57 the market is somewhat overbought. However, this by itself isn't a strong enough indication to signal a trade. Look for additional evidence of weakness from this indicator before getting too bearish here.

VOLATILITY INDICATORS:

Bollinger Bands (20-Day Average +/-1 Standard Deviation): As prices are closer to the bottom band than the top band, the Bollinger Bands are indicating overbought prices.

RESISTANCE AND SUPPORT LEVELS:

8.480 - Highest High in last 50-Days
8.368 - 20-Day Simple Moving Average Plus 2 Standard Deviations
8.179 - 20-Day Simple Moving Average Plus 1 Standard Deviation
8.130 - Highest High in last 10-Days
8.020 - High
7.998 - Last Price
7.970 - 25-Day Simple Moving Average
7.944 - 10-Day Simple Moving Average
7.936 - 3-Day Simple Moving Average
7.926 - Low
7.800 - 20-Day Simple Moving Average Minus 1 Standard Deviation
7.620 - 50-Day Simple Moving Average
7.611 - 20-Day Simple Moving Average Minus 2 Standard Deviations
7.580 - Lowest Low in last 10-Days
7.480 - 100-Day Simple Moving Average
7.187 - 200-Day Simple Moving Average
6.914 - Lowest Low in last 50-Days

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Base metals

Major Headline:

· Copper rose in MCX / LME, reversing an earlier drop, on signs that stockpiles of the metal may decline further, limiting supply. Zinc and lead also rose.

· MCX Copper rose almost by 3% on BHP billiton acquisition new and stock news from lme. MCX Copper traded at 288.50 per kg to register days high.

· MCX Zinc followed the red metal and traded as high as Rs. 95.40 pr kg, similarly Lead Feb touched high of Rs. 111.15 per kg.

· MCx Nickel remain bearish and was trading with loss at Rs. 1053 per kg

· Copper also rises as BHP Billiton, the world’s biggest mining company, raises the stake to acquire Australian Mining Company Rio Tinto

· Jiangxi Copper Co., China's second-largest producer of the metal, said output at its smelter dropped as much as 70 percent of normal production after weather hampered power supplies since Feb. 2. The company produced 554,000 tons last year, according to Beijing Antaike Information Development Co.

* Previously copper declined as global stock markets witnessed losses Tuesday, crude oil prices declined and the US dollar firmed against the euro. The prices were also hit by weaker than expected release of U.S. January ISM Non-Manufacturing Business Index.
* Moreover poor weather conditions along with weeklong Lunar New Year holidays beginning Wednesday in China are keeping off China’s demand. Thus Copper market may once again look at US economic factors, raising chances of slight ease in red metals prices in the near term.


MCX Copper Feb

Technical Outlook:

Momentum studies are bearish but are now at oversold levels and will tend to support reversal action if it occurs. 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 moving average. The upside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Copper Feb: Buy at 285 for the target of 291.30 and 295 with stop loss at 282.50

MCX Zinc Feb

Technical Outlook:

Momentum studies are bearish but are now at oversold levels and will tend to support reversal action if it occurs. 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 moving average. The upside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Zinc Feb: Buy at 94.40 for the target of 95.80 and 96.40 with stop loss at 93.75

MCX Nickel Feb

Technical Outlook:

Momentum studies are bearish but are now at oversold levels and will tend to support reversal action if it occurs. 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 moving average. The upside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Nickel Feb: Sell at 1070-65 for the target of 1040 and 1020 with stop loss at 1095

MCX Lead Feb

Technical Outlook:

Momentum studies are bearish but are now at oversold levels and will tend to support reversal action if it occurs. 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 moving average. The upside closing price reversal on the daily chart is somewhat positive.

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Bullion

Major Headline:

· Gold rose in London/Comex/MCX on speculation investors will add to holdings of the metal to take advantage of a 5 percent drop from a record last week. Platinum climbed to an all-time high.

· MCX Gold April traded above Rs. 11540 per 10 gram with net gain of almost 1.20% similarly MCx Silver March rose to a high above 21395 with almost 1% gain.

· International Spot gold traded above $ 908 and Silver traded above $16.64

· Assets in the StreetTracks Gold Trust, the biggest fund backed by gold, have held at 631 metric tons this month even as prices peaked at a record $936.92 an ounce on Feb. 1. Gold today snapped its biggest four-day decline in two months.

· The Federal Reserve has reduced its benchmark interest rate twice this year even after U.S. inflation last year rose the most in 17 years. Prices paid by consumers have been rising faster than the 3 percent deposit rates in the U.S., giving savers a negative real rate of return. Costs are also rising from the U.K. to Italy, Singapore and China.

· Some Asian buyers took advantage of gold's lower prices; boosting prices back to around USD892/oz. However, reluctance to maintain long positions over the long Lunar New Year holiday weekend capped buying interest, traders said.

· The market remains heavily long, leaving prices vulnerable to a retreat in the short-term, they said, while overall sentiment remains bullish.

· Very weak US non-manufacturing data following close on last week's poor payrolls numbers may indicate that the US is already in a recession, which will pressure stock markets lower and drag gold with it, said Westpac Bank Chief Currency Strategist Robert Rennie.



Indian Bullion Spot Market

Spot precious metals finished with mild gains tracing the trends in international markets. In international markets gold eyed the USD 900 level on bargain hunting. Gold was buoyed by concerns of yet another interest rate cut by the Federal Reserve amidst background of a dampening US economy.

· In Mumbai markets, gold (995) jumped up by Rs 65 to finish at Rs 11,470/10gm and gold (.999) by Rs 70 to finish at Rs 11,525/10g. Arrivals in gold were at 100 kilos and traded volumes at 100 kilos. Silver (.999) was down by Rs 10 to close at Rs.21,005/kg.

· Chennai gold (995) decreased by Rs 50 to finish at Rs 11,550/10gm and gold (.999) by Rs 150 to close at Rs 11,600/10gm respectively whereas Silver (.999) declined by Rs 100 to close at Rs 20,500/kg.

· Jaipur gold standard closed steady at Rs.11,600/10gm whereas Silver (.999) rose by Rs 600 at Rs 21,000/kg.

· Ahmedabad gold (995) and gold (.999) rose by Rs 80 to close at Rs 11,480/10gm and Rs 11,530/10gm respectively whereas Silver (.999) was down by Rs 100 to close at Rs 21,000/kg.

· In Delhi bullion markets, gold (995) rose by Rs 15 to close at Rs.11,540/10gm and gold (.999) by Rs 25 to Rs 11,600/10gm respectively whereas Silver (.999) ends Rs.20,600/kg, down by Rs 50.


Technical Outlook:

Momentum studies are bearish but are not looking at oversold levels and will tend to support reversal action if it occurs. 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 positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Gold April: Buy at 11460-70 fro the target of 11590 and 11660 with stop loss at 11415



MCX Silver Mar

Technical Outlook:

Momentum studies are bearish but are not looking at oversold levels and will tend to support reversal action if it occurs. The daily stochastics moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Silver March: Buy at 21280-300 for the target of 21550 and 21750 with stop loss at 21120

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