Remain short in Silver from higher levels: Karvy

Karvy Commodities Broking has come out with its report on Gold and Silver.  According to the research firm, US mortgage application and Chicago purchasing manager may show improvement and these may support dollar. Hence, Silver prices might come down at the later part of the day. Therefore recommend staying short in Silver from higher levels.

Gold: Gold futures prices have changed a little with hardly any variation on weekly basis so far at the Globex. The Asian equities are mostly trading at a positive note after the US home prices rose and the US equity market will resume trading today after threat from the hurricane Sandy dissipates. The Euro at present has advanced a little supporting gold to a little extent but the dollar strength would be a matter of concern. However, investment demand seems to remain sturdy as holdings in ETPs rose to a record 2587.9 tons yesterday. Concern will be there today as after two days COMEX will be opening and hence market might move in any direction. Probably, devastation in US may lead investors to buy gold as a haven while the US equities may open at a stronger note following European shares that have gained modestly in last two days.

This would be a threatening factor for gold. Basically, prices are consolidating in a range of $1705-1715. Technically, sustained trade above $1722 may only confirm bullishness. Reports today may also forecast the Euro zone unemployment to rise while the US mortgage application and Chicago purchasing manager may show improvement. These may support the dollar in evening. Hence, gold’s bias should remain on down side. At the domestic front however, rupee is likely to depreciate which might limit the down side. But gold’s drop in late yesterday has seen higher volumes (+23.34%) and open-interest from the prior session. This could be a pressurize factor for gold at MCX. Hence, we recommend staying short for the metal from higher levels.

Silver: Silver futures prices have gained a little at the Globex but we think the metal to pare the early gains during the day. COMEX trading will be resuming today and hence volatility is expected during the evening hours. The dollar might gain some point from the economic data releases while after the storm devastation the reserve currency may draw demand for safety. This would be having a negative impact on silver. Also, the Euro area unemployment may climb but looking at the recent past data from the euro zone we might not probably see further weakening on the figures. US mortgage application and Chicago purchasing manager may show improvement and these may support dollar. Hence, prices might come down at the later part of the day. We therefore recommend staying short for the metal from higher levels.

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