Adam Capital

14^Th May, 2015

COMMODITY MARKET INSIGHT

BULLION

Bullions: Good economic data can further reduce the safe haven demand

In the month of April bullion counter traded on volatile path as on one side decreased safe haven demand amid surging global stock markets and rise in greenback kept the prices under pressure while on the other side physical demand at lower levels capped the downside. Overall gold traded in range of 26145-27279 in MCX and $1174.10-1224.50 in COMEX. Silver traded in range of $15.58-16.95 in COMEX and 35590-38588 in MCX.

Meanwhile movement of local currency rupee affected the prices on domestic bourses. Greece can scrape together enough cash to meet its payment obligations into June, euro zone and Greek officials stated recently , playing down fears of an imminent default even as hopes receded of a deal with creditors to release fresh aid. In the month of March China imported 46.4 tonnes of gold from Switzerland and India imported 72.5 tonnes. Chinese demand was stronger in March as business restocked their supplies after the Lunar New Year celebrations. 

At the same time Indian demand was strong in preparation for Akshaya Tritiya festival. According to the latest data from SPDR Gold Shares, the world's largest gold-backed exchange traded fund (ETF) has seen its gold reserves grow by 164,282 ounces to 23.87 million ounces. Better economic data have added to gold investors' worries that the U.S. economy is reaching the point where the Fed will be comfortable with raising interest rates for the first time since 2006.

In the month of May bullion counter can trade on volatile path as good economic data can further reduce the safe haven demand while global geopolitical tensions in Iraq and increase in physical demand along with worse economic data may give support to the prices.

On domestic bourses the movements of local currency rupee will be the key factor to watch out which can move in range of 62-65 in the month of May. Gold can trade in range of Rs 25800-28000 in MCX and $1110-1260 in COMEX. Silver can trade in range of 35000-41000 in MCX and $15.50-17.70 in COMEX. The gold/silver ratio can move in range of 70-75 in near term.

Following a two day meeting, the Federal Reserve pointed to weakness in the U.S. labor market and economy, a sign it is struggling with plans to raise interest rates this year. Although bullion got boost recently after a string of U.S. data weakened the dollar and pointed to slowing momentum in the world's

Largest Economy U.S. Gross domestic product expanded at an annual rate of only 0.2 percent, the weakest in a year and below expectations.

GOLD

Technically market is under fresh buying as market has witnessed gain in open interest by 10.66% to settled at 7193 while prices up 361 rupee, now Gold is getting support at 27196 and below same could see a test of 26865 level, And resistance is now likely to be seen at 27713, a move above could see prices testing 27899.

SILVER

Technically market is under fresh buying as market has witnessed gain in open interest by 7.77% to settled at 11094, now Silver is getting support at 38642 and below same could see a test of 37759 level, And resistance is now likely to be seen at 40019, a move above could see prices testing 40513.