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KASB Securities Limited and Economics Research - Commodities Corner


April 10, 2013 (PPI-OT)

Greenback cools off while commodities join the rally

Stocks advanced on Tuesday with the Dow closing at a record high as a rally driven by onset of earnings season heated up. Similarly other equity indices also displayed gains (SandP +0.4%, Euro Stoxx50 +0.8%).

According to KASB Securities Limited both WTI (+0.9%) and Brent (+1.5%) were also supported by a drop in the greenback (DXY - 0.5%).

It was a quiet trading session in the precious complex, with gold trading in a range of US$1,585- 1,590 and closing up 0.7% while silver out- performed and racked up gains worth 2.5%. Drivers behind the same were the weaker US jobs report data and fresh money printing policies adopted by the Bank of Japan.

Spain’s Economic minister opined that the ECB should adopt more accommodative policies to help peripheral economies battle the debt crisis. The minister was of the view that the Spanish economy would stabilize in 2H13 after a relatively turbulent 1H13.

Key events/data releases Time Currency Impact Event Forecast Previous 10 April, 2013 Wednesday 11:45am EUR Medium French Industrial Production m/m 0.6% - 1.2% 7:30pm USD Medium Crude Oil Inventories - 2.7mn 10:00pm USD Medium 10- yr bond auction - 2.03|3.2 11:00pm USD High FOMC Meeting Minutes - - 11:00pm USD Medium Federal Budget Balance - - 203.5bn 11 April, 2013 Thursday 5:30pm USD High Unemployment Claims 362k 385k 5:30pm USD Medium FOMC Member Bullard Speaks - - 5:30pm USD Medium Import Prices m/m -0.4 1.1%


Gold Spot

Technical Strategy: Buy on Weakness

Gold prices rose yesterday and can now target US$1,596 which is the 23.6% retracement level of the fall from US$1,795 to US$1,540. However, it could face resistance at that level as it also faces a declining trend line. A closing above this level could guide gold prices further to US$1,615.00. That said, it is recommended to buy in between US$1,580- US$1,585 with risk defined below US$1,575.

Silver Spot

Technical Strategy: Buy on Weakness

Silver prices rose sharply yesterday after holding its important support level of US$27.10. Overall structure remains strong with silver prices looking to target US$28.70 which is its 23.6% retracement level of the fall from US$35.37- US$26.60. Therefore, it is recommended to buy in between US$27.60- US$27.80 with risk defined below US$27.40.

WTI Spot (Crude Oil)

Technical Strategy: Play the range

WTI is trading in a range between US$92.50- US$94.50 while it is holding its trend line support standing at US$92.50. A break below or above any of the aforementioned levels could guide its prices further. Until then, it is recommended to play the range with buy side bias.