KASB Securities Limited and Economics Research – Commodities Corner

Karachi, April 27, 2015 (PPI-OT): Gold falls to important support

Strong equities dent Gold: Gold prices continued to fall on Friday and hit a five week low despite a weaker US Dollar. While prices have held important support near US$1,175, a closing below this level could lead to further losses. Additionally, US equities continued to rally despite worse than expected economic data from the US. Participants will now focus in on the Federal Reserve meeting on Wednesday for clues on when to expect interest rate hike. In other news, no deal was reached between Greece and the euro zone finance ministers on Friday. In the aftermath, the German finance minister hinted that his country was preparing for a possible Greek default.

Oil holds on to gains: WTI prices rose for the sixth consecutive week supported by a weaker US Dollar and concerns about the conflict in Yemen. Saudi air strikes continued on not only the city of Aden, but also for the first time, on the capital Sana. In other news, a report by Baker Hughes, showed yet another drop in the US rig count. The 20th straight weekly drop hints at a possible drop in US production in the second half of the year.

Gold Spot

Technical Strategy: Play the Range

Gold closed at US$1,179, below trendline resistance which is at US$1,185. However, RSI and Stochastic are neutral in the short term charts and suggest range bound-trading in the near term. KASB Securities Limited recommends playing the range of US$1,175 – US$1,185. A break below US$1,175, could target US$1,168, while a break above US$1,185 could target US$1,196 (20 – DMA).

Silver Spot

Technical Strategy: Play the Range

Silver closed at US$15.71, below the 5 –DMA which is at US$15.89. However, RSI and Stochastic are neutral in the short term charts and suggest range-bound trading in the near term. KASB Securities Limited recommends playing the range of US$15.65 – US$15.89. A break below US$15.65 could target US$15.25, while a break above US$15.89 could target US$16.20.

WTI Spot (Crude Oil)

Technical Strategy: Sell on Strength

Oil closed at US$57.26, below the previous high which is at $58.35. RSI and Stochastics are bearish and suggest lower prices in the near term. KASB Securities Limited recommends selling on strength below US$58.35, targeting US$56.54 with stops above US$58.85.

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