In an interview to CNBC-TV18, Naveen Mathur of Angel Broking spoke about the outlook for the commodities market.
Below is a verbatim transcript of the interview:
Q: There has been weakness in the global gold price, how are you approaching that in the domestic market today?
A: There are a couple of fundamental reasons why the gold prices is a little sideways to a bearish tone. The last week or the last ten days data and particularly a month data from the US is coming little positive. The labour market is improving. The gross domestic product (GDP) figure, which came up the last week was pretty much positive. Therefore there are expectations building around that the Fed may start the tapering on the quantitative easing-3 (QE) by maybe September on their meeting on the FOMC.
With that kind of expectations building across, the dollar is gaining strength. Therefore we are seeing kind of a flattening trend to a bearish trend in international markets because gold is negatively correlated to the price movements of the US dollar.
In Indian markets, we are seeing a little upside and a pretty volatile markets because mainly on the currency side, the rupee is depreciating/appreciating. There are too much of things happening across rupee against the US dollar.
Overall trend still remains pretty much positive for India markets because of the depreciation bias against the US dollar for rupee. Our technical strategy therefore for today would be to buy the contract on the gold for the month of October in a range of approximately Rs 27,520-Rs 27,570 per 10gm levels on the downside dips. At the same time, put the stop loss for this trade at around Rs 27,400 per 10gm. We are expecting targets to an extent of Rs 27,800-27,850 per 10gm.
Q: Any thoughts on silver?
A: Silver is moving in a range of approximately USD 20 per ounce or so but we will still go positive on the silver. The buying strategy therefore would be to buy it approximately at a level of around Rs 41,000-41,100 per kilogram, stop loss recommended for this trade would be Rs 40,700 per kilogram and the targets on the upside would be in a range of Rs 41,900-42,000 per kilogram.
Particularly, the base metal pack is looking positive with the data coming out from China. At the same time, the Bank of Japan today in their monetary policy keeping the rate unchanged is talking about more stimulus to move towards 2 percent inflation targets. So overall base metal pack looks little positive even in India with a rupee depreciation bias.