Trend in base metals remains bearish: Commtrendz

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T Gnanasekar, Director, Commtrendz Research & Fund Management sees gold testing the USD 1000 per ounce level in the near-term. He said, "Some near term support is seen on bargain hunting and also on the basis of some amount of physical buying as well. But then I think there is still some downside left and possibly we could see a test of USD 1,000 per ounce."

He sees some signs of exhaustion in base metals, which is primarily connected, he says, with the sovereign debt problems in the euro zone. "The trend certainly remains bearish at this point in time. Any kind of rallies have to be sold," said Gnanasekar.

Here is a verbatim transcript of the interview. Also watch the accompanying video.

Q: What is your sense pretty much on base metals now considering you have seen such a strong bounce back - what is the prognosis in the entire commodity universe on how the dollar index may do now?

A: Technically, on the base metals I think there are some signs of exhaustion seen here and essentially it has to do with mostly with the sovereign debt problems in the euro zone. In case we see the data which is expected in a while, on employment, comes against market expectations I think there is certainly going to be a bounce back or some kind of a retracement.

But the trend certainly remains bearish at this point in time. Any kind of rallies have to be sold. But at this point in time I would certainly be wary of any kind of bearishness from present level. I would look at opportunities to buy.

Q: How strong do you think this bounceback may be in case you do get positive numbers in from the US today in terms of non farm payrolls. In terms of the number of days that it may extend would this be just a couple of days or do you sense it may sort of be a much firmer short covering rally?

A: I do no think it is going to be a strong short covering rally. Certainly it is going to be a profit booking rally to me because the sovereign debt problem is not something which is going to solve overnight.

I think it started with Greece and now they are talking about Spain, Portugal and other countries. So one needs to clearly get a sense of what is happening there on the financial market overall in the euro zone. So that won't span out overnight. My own sense is that it is going to take a while and markets would tend to settle till the time they get some clarity on that.

Q: More weakness on gold and silver?

A: Some near term support is seen on bargain hunting and also on the basis of some amount of physical buying as well. But then I think there is still some downside left and possibly we could see a test of 1000 dollar.