Sep 12, 2012, 12.17 PM IST

Biggest beneficiary of QE3 likely to be base metals: IIFL

On third consecutive day this week, precious metals opened with gains as the commodity market began trade. Crude and natural gas also continued to rise as well.

Tarang Bhanushali, Analyst ,IIFL

Expertise : Commodities

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Bazaar at 08:00 am

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On third consecutive day this week, precious metals opened with gains in the commodity market. Crude and natural gas continued to rise as well.

However, base metals prolonged their bearish stance as copper, nickel, zinc and lead fell from yesterday’s closing levels.

Tarang Bhanushali of IIFL advises to keep position light for the next two days.

In an interview to CNBC-TV18, he said, “For the next two days, one should keep their positions quite light considering that we have the German court ruling today and tomorrow the Fed announcement.”

“If we see the European announcement quite favourable then it would lead to a higher euro and that would again favour the precious metals,” he further added.

Below is the verbatim transcript of the interview

Q: The bullion market globally is still going pretty strong. Would you still tell investors to stay long?

A: I would say that for the next two days, one should keep positions quite light considering that we have the German court ruling today and tomorrow, the Fed announcement. It can swing either side and the volatility would be quite high for the next two days.

So, if anyone wants to take a position, maybe after the event would be a better time to take a position. Even after the event you would get good swings and you can trade in that.

Before the event, I think we would see some profit booking going ahead, we would see some slide in most of the commodities before the announcement.

So, for today, for the first half we would remain on the seller side. Maybe, before the announcement comes, we would wind up our positions by evening.

Q: If somebody had to take a speculative position betting on QE3 tomorrow, what commodity would you advocate?

A: We would advice going long on most of the base metals most of the easing would go into infrastructure boost and that would lead to a demand pullback, which has been quite languished over the last one year.

So, I think base metals would be the beneficiaries of this. If we see the European announcement quite favourable, then it would lead to a higher euro and that would again favour the precious metals.

But the biggest beneficiary of the QE3 would be the base metals pack.

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