Gold took quite a knock and silver started of sharply lower at the opening of commodities market today. Bullion market saw sharp reactions and crude too opened weak.
Tarang Bhanushali, IIFL shared his reading and outlook on commodities like gold and crude. He attributed the sharp correction in most of the commodities to the comment made by Fed Chief that they have still not avoided the fiscal cliff.
"We continue to remain net sellers in most of the commodities today on the anticipation that the dollar would strengthen going ahead and we would see some selling pressure into commodities," said Bhanushali.
He expects gold to head towards USD 1680 per ounce in international market. One can short crude between USD 87-USD 88 per barrel keeping a stop loss around of USD 90 per barrel.
Below is the edited transcript of his interview on CNBC-TV18
Q: What accounts for the sharp knocks in bullion this morning?
A: The comments from the Fed Chief that they have still not avoided the fiscal cliff led to the sharp correction in most of the commodities.
Selling-on-rise was seen in precious metals and that got continued yesterday too. Now we are headed towards USD 1,680 per ounce on gold in the international market. So along with the trend, the sentiment too weakened overnight and that has led to the sharp correction in the precious metals pack.
Q: You are selling crude as well despite some strength globally on it?
A: Yes, we do not expect crude to rise. We are net sellers in crude for the last few weeks and we do not expect crude to go above USD 88-89 per barrel levels. Anywhere between USD 87 per barrel and USD 88 per barrel is a good level to short, keeping a stop loss of USD 90 per barrel.
We continue to remain net sellers in most of the commodities today on the anticipation that the dollar would strengthen going ahead and we would see some selling pressure into commodities.
Q: Any specific levels on silver that you are targeting today?
A: We expect a further Rs 500-600 correction but we would avoid selling at the current levels. We expect a minor bounce back in the first two hours of trading session and maybe that would be a good opportunity to short.
Maybe Rs 100-200 uptick from here would be a good level to short in silver, keeping Rs 700 on the downside.