T Gnanasekar of CommTrendz Research believes that although international price of gold tend to rise, the rupee appreciation is going to cap the upside.
T Gnanasekar of Commtrendz Research believes that although international price of gold tend to rise, the rupee appreciation is going to cap the upside.
In an interview to CNBC-TV18, Gnanasekar said, “The net speculative position in comex gold has reached certain level. So, there could be some amount of unwinding and correction as well.”
Below is the verbatim transcript of the interview
Q: How would you trade gold, is it a short?
A: Gold looks like a short right now. The rupee appreciation is certainly having effect on domestic gold futures. Even if international prices tend to rise, the rupee appreciation is going to cap the upside. It will accelerate the fall.
The net speculative position in comex gold has reached certain level. So, there could be some amount of unwinding and correction as well. So, all put together, it looks like sell on rallies. Gold is headed at least towards Rs 30,500-30,600 per 10 grams levels.
Q: What about silver?
A: Silver is pretty much going to follow gold. It is going to take some cues from base metals. We saw the numbers from China coming in the morning. Not very weak, not good either.
The sentiment is also about risk aversion this week expecting some Moody’s rate cutting on Spain. All this would lead to some kind of a sell off. So, my sense is, it’s a sell on rallies for silver as well.
Q: How would you play the rupee futures for this contract?
A: The October contract is looking like its going to pullback. It has had a decent move and it could come closer to 53.35 or 53.50 levels. It is a good level to sell. A lot of reforms are yet to be unleashed. Also, existing reforms have bought in some much of inflows.
So, inflows would continue and that would continue to pressure the rupee. But, my sense is that it will come and settle somewhere between 51.85 and 52 on spot basis. So, that would be a good level to look to buyback all the shorts.
Q: What about crude?
A: Crude, based on Iran tensions, some amount of bullish bets were taken. But it’s fading away. With Chinese numbers not coming well, there is enough supply in the market. So, there also it’s going to be a sell on rallies. We are expecting it to come down towards Rs 4,700 per barrel levels in the near term.