KASB Securities Limited and Economics Research- Commodities Corner

April 11, 2013 (PPI-OT)

FOMC minutes signal at gradual scale back of stimulus

The USD continued its ascendancy and rallied to near a 4 yr high against the Yen as markets remained buoyed by the Bank of Japan’s stimulus program.

According to KASB Securities Limited however an unexpected release of the FOMC minutes, hours ahead of schedule, did not disrupt the market momentum with equities closing higher (Dow Jones +0.9%, S and P +1.2%).

The minutes showed that policy makers expected to taper off the stimulus by middle of the year and withdraw it later in the year. However markets will also view this in the context of a time lag since jobs data has been poor since the last FOMC meeting.

Gold and silver had earlier traded in a very tight range during the Asian session and began to drift lower gradually. The selling pressure accelerated on the back of FOMC minutes coming out and on news that Cyprus had agreed to sell gold holdings worth €400m as its contribution to an international bailout. This also stoked concerns that other debt riddled nations would follow suit sending the precious metal tumbling 1.7%.

Time Currency Impact Event Forecast Previous 11 April, 2013 Thursday 1:00pm EUR Medium ECB Monthly Bulletin - - 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% 12 April, 2013 Friday 5:30pm USD High PPI m/m -0.2% 0.7% 6:55pm USD High Prelim UoM Consumer Sentiment 79.1 78.6 9:30pm USD High Fed Chairman Bernanke Speaks - -

Source: www.forexfactory.com/calendar

Gold Spot

Technical Strategy: Play the range

Gold tested an important support of US$1,555 yesterday and managed to close above that level which suggests that it is still trading in a range between US$1,550-US$1575. The overall structure is struck in a triangle with resistance at US$1,587 and support at US$1,555. A closing above or below any of the aforementioned levels could guide its prices further. Until then, it is recommended to play the range with buy side bias.

Silver Spot

Technical Strategy: Buy on Weakness

Silver prices are trading in a narrow range between US$27.35-US$27.75 with strong resistance residing at US$28.20. Overall structure remains strong and suggests that it could give an upside break-out and target US$28.80 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$27.35- US$27.50 with risk defined below US$27.00.

WTI Spot (Crude Oil)

Technical Strategy: Buy on Weakness

WTI has been forming a higher high and a higher low which is a bullish sign. Moreover, it held its trend line support of US$92.50 which also shows further strength. That said, it is recommended to buy on weakness with risk defined below US$92.50.