basemetals intraday

Basemetals
04 June 2008 09:58:30



Base Metals June 04, 2008

Major Economic Data:
Federal Reserve Chairman Bernanke told an international monetary conference in Spain that further rate cuts were not likely because of rising inflation. He expects the U.S. economy to improve in the second half of 2008 and into 2009.

The U.S. Commerce Department said that factory orders were up 1.1% in April, much stronger than expected. Factory orders for March were also revised higher, from a 1.3% to a 1.5% gain. Durable goods orders, however, were down .6% in April.

It's a tough time for the auto industry. U.S. vehicle sales in May were down 16% for Ford; 28% for General Motors; and 25% for Chryseler. Also, General Motors announced that they are closing four truck and SUV plants.
Eurostat said that real GDP in the Euro area 15 was up .8% in the first quarter and up 2.2% from a year ago, up slightly from an earlier estimate. Also, an index of industrial producer prices was up 6.1% in April from a year ago, the most in seven years.
The Reserve Bank of Australia kept its interest rate unchanged at 7.25%, as expected.

Copper

Copper fell for a third day in Asia on concern global demand may be waning and as gains by the U.S. dollar reduced investor demand for commodities. Shanghai copper dropped to a four-month low.

The metal fell yesterday after U.S. Federal Reserve Chairman Ben S. Bernanke warned commodity prices will ``level out'' as the slowing global economy reduces demand for raw materials. The dollar rose to a two-week high against the euro after Bernanke signaled the Fed is done cutting U.S. interest rates for now.

Gross domestic product in China, the fastest-growing major economy, expanded 11.9 percent last year and 10.6 percent in the first quarter of 2008.

Manufacturing growth in China eased in May, the CLSA China Purchasing Managers' Index showed on June 2. The gauge declined to a seasonally adjusted 54.7 last month from 55.4 in April, raising concern that the country's copper consumption for appliances and other goods may slow and lead to lower prices.

China's refined copper imports, the world's biggest, may have topped 100,000 metric tons in May for a seventh straight month even as high prices deterred buying and the economy showed signs of slowing.

Copper prices in London have rallied 18 percent this year, as demand from China and supply disruptions helped to shrink global stockpiles by more than a third. China's manufacturing growth slowed last month, raising concern that use of the metal for wires and pipes may decline.

China imported 127,977 tons of refined copper in April, up from 126,421 tons in March, according to revised data issued by the Beijing-based customs office on May 22. Preliminary trade data for May are scheduled for release early next week.

Global stockpiles of copper tracked by the LME dropped 38 percent this year to 122,900 tons as of yesterday, while Shanghai inventories climbed 85 percent to stand at 44,554 tons last week.

Mexico's biggest mining union may vote this week on whether to hold more strikes if the Labor Ministry doesn't officially recognize its leader's re-election.

Ivanhoe Mines Ltd., the developer of the Oyu Tolgoi copper and gold mine in Mongolia, is still talking with the government to secure an investment agreement, the company's founder said.

MCX Copper June - 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 333.1 If market breaches below 333.1 may see prices to take further correction towards 331.6 and 329.1 However if it holds back above 337.1 may see prices to rise further on today. Major resistance is seen at 339.6 and 341.1

Recommendations-MCX Copper June: Sell at 335.50 Target 333 and 331 SL 337.80

Nickel

MCX Nickel June dropped towards the low of 937 yesterday following weakness in red metal, market closed at 951.50 with minor gains. Before it market rose towards the high of 970 following

BHP Billiton Ltd., the world's largest mining company, says the Nickel West unit and Mt. Newman iron ore project in Western Australia are producing as normal after an explosion at Apache Corp.'s plant yesterday threatened the natural gas supply.

OAO GMK Norilsk Nickel, the biggest producer of the metal, faces a weakening profit outlook as falling nickel prices add to concerns about a battle over control of the company, UralSib Financial Corp. said.

Toledo Mining Corp., the owner of nickel mines in the Philippines, said construction of a road at its Berong project may double capacity to 2 million metric tons of ore.

Nickel warehouse stock at LME, net change was -54 MT to 47940 MT

MCX Nickel June - 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 936 If market breaches below 936 may see prices to take further correction towards 920 and 903 However if it holds back above 969 may see prices to rise further on today. Major resistance is seen at 986 and 1002


Recommendations: MCX Nickel June: Sell at 965 Target 945 and 930 SL 978

Zinc

MCX Zinc dropped yesterday following LME movement and LME; market was supported by decline in copper prices. Before it market rose towards the high of 85.45 and dropped to 82.30

Zinc warehouse stock at LME, net change was -500 MT to 144350 MT

MCX Zinc June - 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 81.7 If market breaches below 81.7 may see prices to take further correction towards 80.4 and 78.6 However if it holds back above 84.9 may see prices to rise further on today. Major resistance is seen at 86.7 and 88.0



Recommendations- MCX Zinc June: Sell at 84.20 Target 82 and 81 SL 85.20

Lead

MCX Lead June traded strong as market was expecting a short covering from recent decline in prices. Market traded toward the high of 88.90, before it market dropped to low of 85.20 and closed at 87.90 with 2.73% gain.

Lead warehouse stock at LME, net change was 1300 MT to 68600 MT

MCX Lead 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 89.5 levels. If market breaches 85.2 may see prices to take further upside towards 91.0 and 93.2 However if it holds back below 85.8 may see prices to fall further on today. Major support is seen at 83.6 and 82.1

Recommendations –MCX Lead June: Buy at 86.50 Target 89 and 91 SL 84.80

Aluminium

Record energy prices and power failures from China to South Africa are leading to mounting concerns that aluminum supplies will be curtailed within five years as production costs increase, futures prices show. Aluminum for delivery in 2013 rose 5 percent in May on the London Metal Exchange, the most in three months. The $147 increase in the contacts to $3,110 a metric ton contrasts with a 0.9 percent gain in the cash market for immediate delivery.

Deutsche Bank AG raised its aluminum forecasts on March 28 from this year through 2012 by between 8 percent and 13 percent after oil surpassed $100 a barrel. Snowstorms and last month's earthquake curbed output in China, and South African power shortages delayed the start of a new smelter.

Energy accounts for about 40 percent of the cost of aluminium smelting, compared with 30 percent last year, according to Barclays Capital. Supply will expand at 4.5 percent this year, compared with 12 percent in 2007, according to a May 12 forecast by Citigroup Inc.

Aluminum demand is expanding 6 percent annually, so delays increase concern about supply through 2010, Barclays said. Six new smelters need to be built each year to meet demand, based on the average plant being able to produce 500,000 tons annually.

Aluminum Corp. of China Ltd., the country's largest producer of the metal, cut alumina prices by 16.7 percent to 3,500 yuan ($505) a metric ton effective from today.

Alum warehouse stock at LME, net change was -875 MT to 1074900 MT

MCX Aluminium 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 124.0 levels. If market breaches 124.0 may see prices to take further upside towards 124.7 and 125.3 However if it holds back below 122.7 may see prices to fall further on today. Major support is seen at 122.1 and 121.4


Recommendations–MCX Aluminium June: Buy at 123 Target 124.50 and 126 SL at 121.80

MCXARUN
9994500540

GENERAL MARKET CONDITIONS

I am starting to enjoy the frankness of Fed chairman Ben Bernanke as he said that the Fed is paying close attention to the foreign exchange markets and the decline of the dollar, because of its implications for U.S. growth and inflation. The downward pressures on the dollar has contributed to the unwelcome rise in import prices and consumer price inflation. In January he had explicitly admitted that the US is nearing recession. It’s too early to comment whether the US dollar has bottomed out for the rest of the year. We need to look at the second round effects of higher food and energy prices on US consumer spending as well as global consumer spending. The US dollar will gain if and only if the US economy shows signs of stabilisation. A stable interest rate regime will promote carry trade and could be positive for stock markets till September.

Commodities can fall in the short term due to liquidation of long positions by fund managers after the Bernanke statement. In the medium term to long term, fundamentals will take over and a new high should be formed. Commodities will be delinked from the US dollar and movement in other financial instruments. The only risk to commodity prices in the long term is a sustained global slowdown.

SILVER -- JULY FUTURE

Silver has to break $1713 else it will trade in a wider $1620-$1713 zone. A break of $1713 will result in $1754 and $1780.

MCXARUN
9994500540

comex gold outlook

Gold Outlook
03 June 2008 11:25:55



Gold prices closed moderately higher yesterday, but pared some of the early gains after the dollar edged up against the euro.



International spot gold traded in the range $897.10 - $881.10 and last quoted at $889.50 ($885.90).



Dollar found support in better-than-expected manufacturing data from the US. The Institute for Supply Management's manufacturing index for May rose to 49.6% from 48.6% in April, against the consensus expectation of 48.7%.



An upward revision to first-quarter growth in the US helped the dollar to advance against the major counterparts last week, which pushed down the gold prices. According to the data released by Commerce Department on last Thursday, real gross domestic product of the US increased at a 0.9% annual rate in the first three months of the year, slightly faster than the previous estimate of 0.6%.



Better-than-expected survey on US durable goods orders also underpinned the greenback. Data from the Commerce Department showed new orders for US-made durable goods dropped less than expected 0.5 % in April, against the expectation for a 2.8% drop.



But among data from the US Labor market, the initial claims for state unemployment benefits rose modestly 4,000 to 372,000 in the week ended May 24, according to the Labor Department. However the four-week average of initial claims fell 2,500 to 370,500. Also continuing claims rose by 36,000 in the week ended May 17, reaching 3.10 million. The four-week average of continuing claims rose to 3.06 million, up 18,000.



The recent data from various sectors in the US have given mixed hints regarding the economy.



According to the release by US Conference Board last week, the consumer confidence index fell to 57.2 in May from a revised reading of 62.8 in April.



However the sales of new homes recovered during April for the first time in six months, rising 3.3% in April to a seasonally adjusted annual rate of 526,000, the Commerce Department reported.



Even so, the housing market worries remained. Standard & Poor's reported that the decline in home prices for 20 US metropolitan areas accelerated in March, dropping 14.4% from the past year.



Earlier, the National Association of Realtors had reported a 1 % drop in the resale of houses and condos to a seasonally adjusted annualized rate of 4.89 million in April, from 4.94 million in March.



The minutes from the Federal Open Market Committee's April 29-30 meeting had invigorated worries about the economy. The minutes released last week revealed that the Fed sharply increased its inflation outlook for the current year and downwardly revised the forecast for economic growth for 2008.



Crude oil July in NYMEX settled at $127.59 ($127.35), after trading in the range $125.22 - $129.35.



The latest weekly inventory report by US Energy Department’s Energy Information Administration had shown an 8.8 million barrel drop in the nation’s crude supplies to 311.6 million, in the week ended May 23.



But according to the EIA, the drop in crude inventories was due to temporary delays in unloading oil tankers along the Gulf Coast, and not the result of increased demand.



Potential supply threats due to geo-political tensions, expected demand from China and OPEC’s unwillingness to increase output despite high prices underpin oil prices.



Another attack on Nigerian oil facilities refocused concerns on immediate supplies. Production was partially disturbed after militants attacked a major oil pipeline owned by Royal Dutch Shell in the Niger Delta last week.



Last day DGCX Gold Aug traded in the range $885.00 – $901.10 and closed at $896.10 ($891.50).



Weekly Outlook (Spot gold)



Spot gold might get good support at $880. Resistances are $890, $903 and $914; supports $870, $859 and $848. Sustaining above $880 may lead to $914.



DGCX Gold August



TECHNICAL OUTLOOK (Intra-day)

GOLD (Aug) - Bullish above $ 894.70; bearish below $ 889.50

MCXARUN
9994500540

safe trade calls

GOLD

for the day buy only abv 12310 S/L 12285 and T/p 12340-385/towards 12450 OR sell below 12140 S/L 12165 and T/p 12085-60/12000/close below test 11900-11850 atleast in coming days (any time close above 12600/ 12875/13050/13330/13510 bullish while close below 12000/11775/11375/11200 bearish for medium term)


SILVER

For the day sell below 23150 S/L 23225 and T/p 23050-25/22875-900/close below 22875 test 22575 atleast/towards 22450 OR buy abv 23550 S/L 23500 and T/p 23650/23775 upto 23850 (any time close below 22750-300/21575-500/ 20400/19250/18775 bearish rally while close above 255500/26300/27700 bullish for medium term)


CRUDE


we book profit on sell below 5350, for the day sell below 5360 S/L 5385 and T/p 5320-5300/close below test 5190-210 atleast/towards 5140 in coming days OR sell ard 5570-80 S/L 5585 and T/p 5540-5490 (now crude need to close above 5690-5730/5825 for bullish rally while close below 5300/5120/5050/ 4740/4450 bearish for medium term)


COPPER

we book profit on sell below 333, for the day sell only below 331-330 S/L 332.25 and T/p 326.5-27/below down rally sharp OR buy abv 338.5 S/L 337 and T/p 339.75-341/342.5 upto 345.5 (upside strong rally only on close above 352.5/ 361.5 while close below 333/330-326.5/ 310 bearish for medium term)


MCXARUN
9994500540

bullion intraday

Bullion
03 June 2008 10:28:35



Bullion June 03 2008

Major Headlines:

Gold rose on speculation that investors may stock up on the metal after the biggest weekly drop in price since mid-March. Silver also gained, Gold, which declined 3.7 percent last week, will rise into the first quarter, according to forecasts by analysts compiled by Bloomberg.

ETF Securities Ltd., manager of about $5.7 billion of commodities, said investments in its industrial- metal products dropped 15 percent from the end of March as investors favored precious metals including gold and platinum. Nonferrous-metal assets fell to $172 million at the end of May, from $203 million on March 31, Nicholas Brooks, Assets in precious metals expanded 13 percent to $2.6 billion.

Hedge funds and other large speculators increased so-called net long positions, or bets on higher futures, 5.2 percent in the week ended May 27. It was the second straight gain, May 30 data from the U.S. Commodity Futures Trading Commission showed

Peru's output of most metals rose in April, while gold fell slightly, the Energy and Mines Ministry said late Sunday, Silver production reached 291,646 kilograms in April, an increase of 4.98% compared with April 2006. The ministry said gold output totaled 14,349 kilograms in April, down 0.46% Compared with the same month a year before and Peru is the world's largest producer of silver, and depending on annual production, is among the top five for zinc, copper and gold.

Gold output in Australia slowed sharply during the first quarter of this year, falling to the lowest quarterly level in 19 years because of lower average ore grades. And the Mexico silver production rose 12.6% year on year to 217 metric tons in March, while in April

The rate of gold de-hedging this year may reach the average annual rate it's reached since 2000 of 282 tons, but will likely tail off in subsequent years, the scheduled delivery program suggests further de-hedging of roughly 80 tons this year but anecdotal evidence already indicates that this will be increase


U.S.Economy:

The Institute of Supply Management's manufacturing index improved from 48.6 to 49.6 in May, better than expected, but still a sign of slight contraction.

The U.S. Census Bureau said that construction spending was at an annual rate of $1.1209 trillion in April, down .4% from March's pace and down 3.9% from a year ago. So far in 2008, construction spending is down 2.8% from a year ago


Currencies update:

Australia's Bureau of Statistics said that retail sales were down .2% in April, weaker than expected. The June Australian dollar is steady.

MCX Gold June - Technical Outlook:


The daily stochastic have crossed over down which is a bearish indication. The stochastic 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 12118 If market breaches below 12118 may see prices to take further correction towards 11967 and 11873 However if it holds back above 12363 may see prices to rise further on today. Major resistance is seen at 12457 and 12608

Recommendations–MCX Gold June: Buy at 12210 Target 12270 and 12350 Stoploss at 12155

MCX Silver July - Technical Outlook:

The daily stochastic have crossed over down which is a bearish indication. The stochastic 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 23118 If market breaches below 23168 may see prices to take further correction towards 22871 and 22690 However if it holds back above 23646 may see prices to rise further on today. Major resistance is seen at 23827 and 24124

Recommendations-MCX Silver July: Buy at 23290 Target 23520 and 23780 stoploss at 23120

MCXARUN
9994500540

GENERAL MARKET CONDITIONS

The first trading day of June was very positive for gold and silver unlike the month of May where bears had taken charge. Economic data risk this week is preventing traders from going too short on precious metals. Precious metals also benefited from safe haven demand after news of troubles at Bradford & Bingley, the UK’s largest buy-to-let mortgage lender raised concerns over the health of the UK economy. The company issued a stark warning on the state of the UK mortgage market and said profits in the first four months of the year had halved. The financial services sector is an important driver of UK growth. Global credit worries have once again come to haunt investors. Unless these kind of news die down, precious metals will find investment demand on dips.

Base metals should provide a good investment opportunity in the next fortnight. With every successive fall in zinc, then with lead and nickel the risk to return ratio moves in favour of the buyer. Copper is an every green investment. The key to investing in base metals is to exit the longs at the right time and reduce greed.

COPPER -- JULY FUTURE

200 day MA around $348 will result in copper finding buyers on dips. Resistance at $364.80 and $373.10.

NYMEX CRUDE OIL -- FUTURE

Intra day as long as $123.60 holds downside will be limited.


MCXARUN
9994500540

safe trade calls

GOLD

for the day sell below 12090 S/L 12110 and T/p 12035-12000/sustain below test 11900/towards 11850 OR buy abv 12225 S/L 12205 and T/p 12270-310/ 12340 (any time close above 12600/ 12875/13050/13330/13510 bullish while close below 12000/11775/11375/11200 bearish for medium term)


SILVER

we book profit on sell below 23000, for the day sell below 23100 S/L 23175 and T/p 23000/22930-850/22750 where good support while strong support at 22500 OR buy abv 22525 S/L 22440 and T/p 22600-700/22775/22875 (any time close below 22750-300/21575-500/ 20400/ 19250/18775 bearish rally while close above 25500/26300/27700 bullish for medium term)


CRUDE

we book profit on sell below 5350, for the day sell below 5350-40 S/L 5370 and T/p 5300-10/towards 5225 atleast/ upto 5150 in coming days OR sell ard 5525-30 S/L 5535 and T/p 5490-5440 (now crude need to close above 5690-5730/5825 for bullish rally while close below 5300/5120/5050/4740/4450 bearish for medium term)

COPPER


for the day sell only below 333 S/L 334.25 and T/p 330-31/326.5 where good support seen, fall below 326.5 down rally sharp OR buy abv 338.5 S/L 337 and T/p 339.75-341/342.5 upto 345.5 (upside strong rally only on close above 352.5/361.5 while close below 333/330-326.5/310 bearish for medium term)


MCXARUN
9994500540