Outlook : Bullion, Base Metals & Energy

Gold prices ended slightly lower after volatile trade yesterday.



The dollar edged higher supported by better-than-expected Retail Sales data from the US. According to the release by US Commerce Department, retail sales rose 0.3 % in January.



Reported decline in gold imports from India, the top consuming country influenced the price movement in bullion.



According to India's Bombay Bullion Association gold imports in January slumped to five tons from 62 tons a year earlier, as record high prices affected the demand for the yellow metal.



The Group of Seven industrial nations had approved on Saturday the sale of gold by the International Monetary Fund from April. The IMF is the third largest holder of gold reserves, after the Federal Reserve and Germany's Bundesbank.



International spot gold traded in the range $910.00 - $896.10 and last quoted at $ 904.70 ($905.70).



Oil prices settled above $93 a barrel as traders weighed the threat by Venezuela to halt oil supply to the US and a less-than-expected rise in US crude inventories, against the EIA’s downward revision of world oil demand estimate.



Venezuela's state oil company announced on Tuesday that it has stopped selling crude to Exxon Mobil Corp. and suspended commercial relations with the US-based oil giant. The President of Venezuela, Hugo Chavez had recently threatened to entirely cut supply to the United States.



The weekly inventory report by US Energy Department’s Energy Information Administration showed Crude oil inventories increased by 1.1 million barrels to 301.1 million barrels in the week ended Feb 8. However, an increase of about 2.5 million barrels had been widely expected.



In a monthly report released on Tuesday, the EIA said the world oil market is poised to ease over the next two years with production increases offsetting moderate growth in oil demand.



Also the EIA put forward a downward revision of the oil demand estimate, citing increased risks of a global economic slowdown in 2008. World oil consumption is expected to grow by 1.4 million barrels a day in 2008, about 200,000 barrels lower than last month's estimate.



Crude oil March in NYMEX traded in the range $91.90 - $93.89 and closed at $93.34 ($92.78).



Medium-term Outlook (Spot Gold)

Gold prices are expected to trade within the range $837 - $770. Breaking of either level may decide the direction. $801 may act as the major resistance followed by $824, $836, $850, $863, 872, $887, $900, $912, $915.40, $926. Supports are $754 and $744.

Last day, MCX gold April opened at 11562, traded in the range of 11624 – 11475 and closed at 11585.

Copper February in MCX opened at 308.50, traded in the range 309.70 – 303.00 and closed at 307.65.


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GENERAL MARKET CONDITIONS

Better than expected US January retail sales is positive news for base metals bulls. If the US is able to fend off a recession (which has already been discounted in current base metals prices), all the base metals will out perform precious metals. Crude oil will remain firm if the US avoids recession. However it will not be one way traffic in base metals as investors have memories of last year’s fall. China will remain the key factor for base metals. Once all the snow gets melted and Chinese factories resume normal operations base metals will form a direction as by that time one will be able to estimate the incremental base metals demand caused by heavy snowfall. Chinese factories will also be preparing for the Olympics games in August.

Crude oil prices are floating over $85 a barrel so far in 2008, that too on the time when there is no peak summer demand and there are no hurricanes in the Gulf of Mexico. IEA has reduced its 2008 crude oil global demand forecast to 1.67 million barrels a day. Crude oil demand from countries like India and other nations will continue to rise as prices are subsidized below $70 a barrel. If crude oil prices are able to hold $85 till April, it can rise to $117 and more in the summer. However I’m not a crude oil bull and still expect crude oil to fall to $78 this summer when there is more evidence of reduced global demand.

Gold and silver will be volatile. Silver will continue to outperform gold. There is mild physical demand at lower levels. Spot silver has to break $18.00 by next week for gains. Technically gold is in neutral zone.

GOLD -- APRIL FUTURE -- INTRA DAY PIVOT:$920.30

Gold has to hold $896.80 to prevent a fall to $888 and $878.60. On the higher side a break of $916.10 will result in $924 and $932.0

NYMEX CRUDE OIL -- FUTURE -- INTRA DAY PIVOT: $90.20

Crude oil has to hold $89.56 to be in bullish zone or break $95 for direction.


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Technicals – MCX (Intra day calls)

CRUDE OIL (February) BULLISH ABOVE 3711 BEARISH BELOW 3697

GOLD (April) BULLISH ABOVE 11623 BEARISH BELOW 11585

SILVER (March) BULLISH ABOVE 22149 BEARISH BELOW 22065

COPPER (February) BULLISH ABOVE 311.05 BEARISH BELOW 310.25

LEAD (February) BULLISH ABOVE 121.45 BEARISH BELOW 121.00

NICKEL (February) BULLISH ABOVE 1112 BEARISH BELOW 1107

ZINC (February) BULLISH ABOVE 98.30 BEARISH BELOW 97.80

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for safe trade follow this

GOLD

for the day sell only below 11550 S/L 11570 and T/p 11515-490 upto 11450 OR sell ard 11735-45 S/L 11750 and T/p 11675-650, only sustain below 11540/11435/11375 & 11300 bearish rally test 11100-11050 atleast (any time close above 11875 bullish while close below 11300/10950-900/10500/10050/9850/9575 bearish for medium term)

SILVER

for the day sell only below 21850 S/L 21910 and T/p 21750-675-625 atleast upto 21500 OR sell ard 22340-375 S/L 22400 and T/p 22250/22150 (any time close below 21475/20950/20300/19725/ 19375/19000/18625/18250/18100/17750/ 17050/16450 bearish rally while close above 22450/23150 bullish for medium term)

CRUDE

EIA Crude oil inventory schedule to release today. book profit on buy recm yesterday, for the day sell only below 3645 S/L 3665 and T/p 3620-3600/3565 OR buy only abv 3725-30 S/L 3705 and T/p 3750-55/75/3800-20 (now crude need to close above 3755/3840/3910-35 for bullish while close below 3600/3475/ 3380/3290-60 bearish for medium term)

for the day sell only below 305.5 S/L 307 and T/p 303.5/ 301.5/300 upto 297 OR buy only abv 312.5 S/L 311 and T/p 314-15/317 (upside strong rally only on close above 312.5/321.5/327/331.5/348 while close below 286.5/278/270/265/250/235 bearish for medium term)

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energy intraday

Major Headline:

· Crude oil on Nymex retreated from intraday high but has continued to trade with modest gains near USD92 per barrel in the electronic trade session Monday extending the 5.3 per cent rise noted in previous two trading sessions following which it settled on Friday at the highest price since Jan 30.

· Venezueala's President, Hugo Chavez, threatened to stop oil sales to the U.S. if ExxonMobil wins its court battle to gain back property that was lost when Chavez took over the oil industry. Recently, a British court ruled in ExxonMobil's favor to freeze $12 billion of Venezuelan assets. March crude oil is steady to lower.

· A fake bomb threat on Sunday led to a halt in production and evacuation of workers at the Safe Scandinavia accommodation rig in North Sea which is operated by Britannia Operators. However reports noted that workers are being returned to the rig.

· However weighing on prices are concerns that global economic slowdown will affect oil demand. The Group of Seven industrial powers (G7) finance officials on Saturday said that the world and G7 economies both have retained solid fundamentals however downside risk to the economies remain.

· Crude oil futures have lately taken cues from equity markets. U.S. stock indices noted mixed closing Friday. Asian stocks markets weakened today while European markets are seen opening lower.

· G7 also asked the Opec and other oil producers to raise production. Opec at its Feb 1 meet decided to keep output steady stating that stockpiles may increase and on concerns that economic slowdown will affect demand. Opec will now meet on March 5 to take stock of the market condition and some have indicated that the oil cartel may cut down production.

· According to Dow Jones newswires report, extremely cold air and gusting winds blasted the U.S.Great Lakes and Northeast early Monday while snow fell over the Midwest, OhioValley and Great Lakes. Also extremely cold air from the Upper Midwest was to keep the Northeast very chilly.

· Temperatures in the Northeast are forecasted to rise only into the 10s, 20s and 30s while the Upper Midwest should struggle to rise above 0 degrees.

· Colder weather increases demand for natural gas leading to larger draw from natural gas stocks. After the record high draw of 274 Bcf for the week ended Jan 25, U.S. working gas stocks noted a bigger than expected decline of 200 Bcf last week following which its surplus over five year average stocks for the period narrowed while deficit from stocks a year ago broadened.

MCX Crude Oil Feb

Technical Outlook:

Momentum studies are bullish but are now at overbought levels and will tend to support reversal action if it occurs. 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 moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Crude Oil Feb: Buy at 3610-20 for the target of 3660 and 3730 with stop loss at 3565

MCX Natural gas Feb

Technical Outlook:

Momentum studies are bullish but are now at overbought levels and will tend to support reversal action if it occurs. 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 moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

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Base metals intraday

Major Headline:

· Copper rose in London, extending two weeks of gains, on speculation that more snow in China will further disrupt output of industrial metals including aluminum. Lead rose to a two-month high.

· MCX Copper registered days high at Rs. 312.30 per kg, Nickel rose towards Rs. 1128 per kg , Lead Feb also followed other basemetals and registered days high near Rs. 121.30 per kg.

· Copper climbed 6.5 percent last week, the most since May, after China's worst snow storms in decades last month hampered the production and transportation of commodities. More snow and rain is expected in the next 10 days, the China Meteorological Administration said today.

· Goldman Sachs Group Inc. said it may take ``months'' for China to restart metals smelters after the severe weather. ``Such energy intensive raw material production activities are likely to be a lower priority for power restarts relative to residential or labor business activities,'' analysts including Jeffrey Currie in London, said in a report dated Feb. 8.

· Hedge-fund managers and other large speculators cut their net-short positions, or bets on price decline, in New York copper futures by 23 percent in the week ended Feb. 5, from a week ago, according to Washington-based U.S. Commodity Futures Trading Commission data.


MCX Copper Feb

Technical Outlook:

Momentum studies are bullish but are now at overbought levels and will tend to support reversal action if it occurs. 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 moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Copper Feb: Buy at 305-304 for the target of 309 and 313 with stop loss at 301.75

MCX Zinc Feb

Technical Outlook:

Momentum studies are bullish but are now at overbought levels and will tend to support reversal action if it occurs. 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 moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Zinc Feb: Buy at 95.50 for the target of 98.50 and 99.80 with stop loss at 94.60

MCX Nickel Feb

Technical Outlook:

Momentum studies are bullish but are now at overbought levels and will tend to support reversal action if it occurs. 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 moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Nickel Feb: Buy at 1095 for the target of 1135 and 1160 with stop loss at 1073

MCX Lead Feb

Technical Outlook:

Momentum studies are bullish but are now at overbought levels and will tend to support reversal action if it occurs. 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 moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Lead Feb:

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Bullion

Major Headline:

· MCX gold trade near all-time high Monday boosted by overseas prices, gaining for the fifth consecutive trading session, but domestic demand slackened.

· MCX Gold April registered days high near Rs. 11809, silver followed yellow metals and traded near Rs. 22174 per kg. Markets remain positive following international trend.

· Gold rose also as interest-rate cuts feed through to higher commodity prices, increasing demand for precious metals as a hedge against inflation. Platinum advanced to a record, silver climbed to a 27-year high and palladium reached the highest since September 2001.

· Group of Seven officials at a meeting in Tokyo at the weekend indicated they would lower rates further to spur economic growth. Gold has climbed 11 percent this year as the Federal Reserve reduced benchmark borrowing costs 1.25 percentage points, saying ``risks to growth remain.'' The UBS Bloomberg Constant Maturity Commodity Index has gained 8.6 percent.

· The US dollar was weaker against the yen in afternoon trade in Asia on Monday on speculation Federal Reserve Chairman Ben Bernanke will later this week reiterate that interest rates will fall further amid slowing economic growth.

· World oil prices continued higher in Asian trade on Monday while supply worries outweighed concerns about the health of the United States economy.

Indian Bullion Spot Market

Precious metals maintained its upbeat tone in spot markets on a weak dollar and supply problems. Saturday's approval by the Group of Seven rich nations for sale of gold by the International Monetary Fund (IMF) from April also failed to impact the upside.

· In Mumbai markets, gold (995) finished at Rs 11,895/10gm and gold (.999) finished at Rs 11,950/10g. Arrivals in gold were at 150 kilos and traded volumes at 100 kilos. Silver (.999) closed at Rs 21,675/kg. Arrivals in silver were at 200 kilos and traded volumes at 200 kilos.

· Chennai gold (995) and gold (.999) finished at Rs 11,870/10gm and Rs 11,920/10gm respectively whereas Silver (.999) closed at Rs 21,100/kg.

· Jaipur gold standard closed at Rs.11,950/10gm whereas Silver (.999) ends at Rs 21,500/kg.

· Ahmedabad gold (995) closed at Rs 11,890/10gm and gold (.999) at 11,950/10gm respectively whereas Silver (.999) closed at Rs 22,000/kg.

· In Delhi bullion markets, gold (995) closed at Rs.11,890/10gm and gold (.999) at Rs 11,950/10gm respectively whereas Silver (.999) ends Rs.21,400/kg.

MCX Gold (Apr)

Technical Outlook:

Momentum studies are bullish but are now at overbought levels and will tend to support reversal action if it occurs. 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 moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Gold April: Buy at 11700-680 for the target of 11760 and 11800 with stop loss at 11650

Sell at 11810/30 for the target of 11740 and 11700 with stoploss at 11855

MCX Silver (Mar)

Technical Outlook:

Momentum studies are bullish but are now at overbought levels and will tend to support reversal action if it occurs. 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 moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Silver March: Buy at 21960-940 for the target of 22150 and 22350/450 with stop loss at 21845

Sell at 22450/22500 for the target of 22350 and 22150 with stoploss at 22600

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