GENERAL MARKET CONDITIONS

ARE HEDGE FUNDS MOVING AWAY FROM COMMODITIES

There was some news that “Hedge funds are exiting commodities following their recognition that the US Fed intends to fight inflation with rate hikes and that regulators intend to fight "speculative abuses" in various markets with limits.” I do not believe it. This is just some churning of short term portfolio away from commodities before the US presidential elections and nothing else. We all know that commodities price rise or fall have a lagging effect. The positive effects of the current fall in commodity prices will be reflected in October which is just before the US presidential elections. I believe that hedge funds have political patronage. If central banks and commodity exchange officials were to act they could have reacted much earlier as they advanced information of the things to come. Once we know who is the next US president commodities will re start the next phase of the bull run and possibly new highs will be created.

Monetary heads of all the countries will try their best to break the commodity bull run and they have been successful in the short term. In the long term it’s the supply side pressures which the central banks cannot control and hence they will be helpless in controlling prices from falling. All the central banks can do is to reduce the pace of rise of commodities but they cannot alter the rise.

35 YEAR HISTORICAL CHARTS PORTRAY THAT GOLD SHOULD RISE 15% FROM AUGUST LOWS AND IT REMAINS TO BE SEEN WHETHER HISTORY REPEATS ITSELF.

GOLD DEMAND

If the rise in any commodity gets supported by an equal rise in physical demand then the rise will be sustained but the pace of rise will be slow. This is happening in gold and silver. Physical prices of gold and silver bars are at a premium in India. Banks have run out of gold stocks. Wholesalers are fixing their today for delivery on Monday or Tuesday. Gold and silver wholesalers as well as jewelry manufactures have increased their inventory levels and are buying as much as they can as they prepare for the Indian festivals for the next three months. Physical demand for gold and silver will continue to rise. Demand for gold in India will fall below $790 only to reappear around $760.



NYMEX CRUDE OIL (1ST CONTRACT)

In the short term as long as crude oil holds $109 downside will be limited and crude will try for $122.20+. Crude oil has to fall below $109 for another round of selling to $98.40.


MCXARUN
9994500540

safe trade calls

GOLD

THIS WAS OUR WORDS "sustain below 11775 towards 11700-630/ below sharp rally" ACHIEVED SEE DAYS LOW=11305 book profit on sell below 12000/11800, for the day sell below 11300 & more below 11275 S/L 11320 and T/p 11220/towards 11125... sustain close below 11275 & 11200 seen towards 11000 in coming days OR sell ard 11615-20 S/L 11630 and T/p 11550-500 (any time close above 11950/12680/12950/13550/13850 bullish while close below 11275-200 bearish for medium term)


SILVER

THIS WAS OUR WORDS YESTERDAY "sustain below 21400 towards 20950/ sharp down rally" ACHIEVED AS DAYS LOW=20714 book profit on sell below 23075/22700/21575, for the day sell below 20700 S/L 20800 and T/p 20600/500/400/Max towards 20100 in coming days OR sell ard 21160-70 S/L 21200 and T/p 20975-900/upto 20775 (any time close below 20700/19150-19000 bearish rally while close above 22850/25000/ 26100/27250/28000 bullish for medium term)


CRUDE

PRICE TURN EXACT FROM OUR GIVEN LEVEL ON BOTH SIDES book profit on sell below 4825, for the day sell below 4740 S/L 4765 and T/p 4725-4670/upto 4615 OR sell ard 4915-20 S/L 4925 and T/p 4870-4840 (now crude need to close above 5130/5450/5680/ 6040/6360 for bullish rally while close below 4745/ 4670/4385 bearish for medium term)


COPPER

book profit on sell below 334/322/317.5/ 307.75, for the day sell below 305.5 S/L 306.75 and T/p 304/302.5/300/298 OR sell ard 312.2-312.5 S/L 313 and T/p 310-308 (upside strong rally only on close above 324.5/336.5/351/360.5/ 371/387.5/398 while close below 305.5/ 302.5/289/265/251.5/235 bearish for medium term)


MCXARUN
9994500540

long view

SPOT GOLD INTERNATIONAL
LIKELY TO TEST $ 800/ $ 770-60 TOWARDS $740 WITH ANY BREAK & CLOSE BELOW $ 817... ONLY CLOSE ABOVE $ 935/976 & $ 988 BULLISH RALLY AGAIN


NICKEL
LIKELY TO TEST 710-700 WITH ANY BREAK & CLOSE BELOW 735, ONLY CLOSE ABOVE 806/825 SOME UPSIDE AGAIN(AUG)


MCXARUN
9994500540

GENERAL MARKET CONDITIONS

All I can say is that US dollar gains are pain for precious metals and energies. Highly oversold conditions exist in gold, silver and crude oil. Growth rates in other countries are now slowing down. This is the lagging effect of higher energy prices and a US slowdown. The focus of these central banks has switched from managing inflation to growth and some of them may cut interest rates this year. This has resulted in growth differentials between US and other nations getting narrowed and gains in the US dollar.

IS THE SUPER CYCLE IN COMMODITIES OVER

My answer is “No”. Commodities have more to go and the current fall in commodity prices is a part and parcel of a long term bull run. Long term bull runs are accompanied by sharp slides as well. Fundamentals for commodities have not changed. Global population continues to rise with the passing of each day. There are more mouths to feed every second. Urbanisation is getting faster which means forest cover being reduced to accommodate agriculture. This further accentuates global warming and crop failures. Add to this the increase in acreage under bio fuels. This cycle will continue unless global population stabilizes or reduces.

Do not expect global growth over five percent endlessly. Coordinated central bank effort to ensure higher growth rates and their protection policy of supporting failed/busted banks/financial institutions cannot last long. Now every major banks/financial institution knows that if they get busted their central bank is there to protect them. Once the central bank protection policy fails another super cycle in commodities will start which will end only with proctecionism.

A long run bull run does not mean over twenty percent gains in less than six months as we have seen in the first half of 2008. It’s all about the pace of rise for any instrument. If the pace of rise is very high then the pace of fall will be double. Further if any commodity gains backed without any rise in physical demand then the crash will be imminent sooner than later. This is what has happened with crude oil and other commodities.

Before I end, commodities does not mean just precious metals or energies. Commodities include precious metals, base metals, energies and soft commodities. If China starts to slowdown then base metals (including steel) will be the first to get ripped apart and producers will be forced to reduce production. Soft commodities long term story is here. But for the rest namely precious metals, base metals and energies with the long term bull run there will be phases of short term bear runs as well.

WHAT NEXT

In the short term commodities will remain under pressure as long the US dollar continues to gain. But after a certain period there will be a delinking between commodities and the US dollar. The next bull run in commodities will be accompanied by increase in physical prices (instead of just future prices) and the pace of rise will be slow and sustained. Unless gold falls below $680 and silver below $9.50 and crude oil below $80 the long term bull run will be intact.


MCXARUN
9994500540

safe trade calls

GOLD

THIS WAS OUR WORDS "sustain below 11970 towards 11900/11840" ACHIEVED AS DAYS LOW=11773 book profit on sell below 12000, for the day sell below 11800 S/L 11825 and T/p 11775-70/sustain below towards 11700-11630 in coming days OR sell ard 12085-95 S/L 12100 and T/p 12040/ 11985 (any time close above 12680/ 12950/13550/13850 bullish while close below 11770/11275 bearish for medium term)


SILVER

book profit on sell below 23075/22700, for the day sell only below 21575 S/L 21675 and T/p 21500/21400/sustain below towards 20950 in coming days OR sell ard 22070-80 S/L 22100 and T/p 21930-875/775/upto 21675 (any time close below 21575/20925/19150-19000 bearish rally while close above 25000/ 26100/27250/28000 bullish for medium term)


CRUDE

PRICE TURN EXACT FROM OUR GIVEN RESISTANCE=5080 AS DAYS HIGH=5068 for the day sell only below 4825 S/L 4850 and T/p 4800/upto 4725-4670 where good support seen now OR sell ard 4958-60 S/L 4970 and T/p 4940-20 upto 4895 (now crude need to close above 5130/5450/5680/6040/6360 for bullish rally while close below 4825/ 4670/4385 bearish for medium term)


COPPER

book profit on sell below 334/322/317.5, for the day sell only below 307.75 S/L 309.25 and T/p 305/towards 302.5/upto 300 OR sell ard 316.2-316.5 S/L 317 and T/p 315/313.5 (upside strong rally only on close above 324.5/336.5/351/ 360.5/371/387.5/398 while close below 308/302.5/289/265/251.5/235 bearish for medium term)


MCXARUN
9994500540

safe trade calls

GOLD

for the day sell only below 12000 S/L 12030 and T/p 11970/sustain below 11970 towards 11900/11840 OR sell ard 12240-45 S/L 12250 and T/p 12215 upto 12160 (any time close above 12680/ 12950/13550/ 13850 bullish while close below 11970/11275 bearish for medium term)

SILVER

THIS WAS OUR WORDS YESTERDAY "sustain below 22970 towards 22700" ACHIEVED EXACT AS DAYS LOW WAS 22700. book profit on sell below 23075, for the day sell only below 22700 S/L 22780 and T/p 22625/22525 upto 22400 OR sell ard 23290-300 S/L 23325 and T/p 23200-23100 (any time close below 22700/21825 bearish rally while close above 25000/26100/27250/28000 bullish for medium term)


CRUDE

for the day sell below 4960 S/L 4985 and T/p 4920-25/sustain close below towards 4850-4750 in coming days OR buy abv 5130 S/L 5110 and T/p 5165/ 200/upto 5240 (now crude need to close above 5450/5680/6040/6360 for bullish rally while close below 4925 bearish for medium term)

COPPER

book profit on sell below 334/322, for the day sell only below 317.5 S/L 319 and T/p 315/towards 312 OR buy abv 324.5 S/L 323 and T/p 325.5/327.5 Max upto 332 where good resistance seen again (upside strong rally only on close above 336.5/351/360.5/371/387.5/398 while close below 317.5/311 bearish for medium term)


MCXARUN
9994500540

GENERAL MARKET CONDITIONS

The inverse correlation between the US dollar and precious metals was at full force yesterday and may continue today also. The market has shifted its focus to growth differentials from interest rate differentials, which is the prime reason for the US dollar’s gain. Precious metals will remain under pressure as long the US dollar gains. Physical gold demand will fall below $845 whereas investment demand for gold will rise below $845. Over the past two years there has been an inverse correlation between physical demand and investment demand in gold. Gold’s rise will be sustainable only when the rise in price is accompanied by a rise in physical demand and investment demand, else the fear of a big fall also increases.

Among the base metals lead looks positive. Nickel, Zinc and Copper are reaching oversold levels and a technical recovery can happen anytime soon. Fundamentally these metals are bearish. Steel prices have fallen nearly ten percent over the past few weeks. We expect steel to pare all its losses after the Olympics.

COPPER -- SEPTEMBER FUTURE -- INTRA DAY PIVOT: $354.0

Failure of copper to break $354 next week will result in a fall to $332 and $319

MCXARUN
9994500540