Commodities lose flavour: Time to sell gold, silver, crude

In an interview to CNBC-TV18 Naveen Mathur, Associate Director, Commodities & Currencies of Angel Broking shared his outlook and trading strategies on gold, silver and crude. 

Below is the edited transcript of  Naveen Mathur's interview with CNBC-TV18 Q: What is view on this fall seen in gold price? A: The bearish trend will continue in gold for a short time. We have seen a kind of a pullback on the bearish note for gold prices. It has fallen from Rs 29,000 just three days earlier to approximately Rs 26,000-25,500 right now. We know the fundamental reasons why the markets are falling. There is strength in the dollar, the equity markets have performed very well in last couple of days particularly, the US markets have performed well, so people are talking about risk aversion. Therefore, the safe haven demand of gold is getting out. At the same time, there was news of Bank of Cyprus and their gold reserves. With sentiments turning negative, we are seeing a fall, which was seen couple of decades ago. We continue to maintain a bearish note because the trend has reversed after this USD 14-20 break off on the downside. The strategy therefore intraday would be to continue to sell gold at around Rs 26,000-26,500 levels, the targets should be at around Rs 25,200 and stop loss at Rs 25800 or so. Gold closed at Rs 25,630 yesterday. Q: What about silver? How should one approach it? A: This is more scope to sell silver as well. Since silver is a base metal and a precious metal too, taking cues from both the sides, it is not looking good for any of the commodities pack even today. Selling would be a recommended strategy. Base metal pack has fallen down, inventories are rising and economic scenario does not look to be too great in emerging markets, which is an engine for base metal demand. It is trading at around Rs 44,300-44,400 levels, we recommend selling at around Rs 44300-44400 levels. Stop loss recommended for this trade at around Rs 44800 and targets on the downside at 43500. Internationally markets are holding at around USD 22.30-22.40 levels. A crucial support to watch out for silver would be around USD 21.90. If it breaks down we may see around USD 21.60 also. Q: Where do you see crude prices heading? A: Crude is a sell. We recommend a selling position at around Rs 4,840-4,850 per barrel, the stop loss should be at Rs 4,900 and target on the downside is in the range of Rs 4,770-4,740. Crude closed yesterday at around Rs 4,840-4,850. Overall international markets also look bearish, it is trading at around USD 88-89 in international markets and Brent crude has come down drastically. It has broken the USD 100 level per bbl on the downside. So, the premiums are getting narrower between WTI and Brent. We are expecting markets to be on the downside with USD 87 right now. USD 85-86 is where it can immediately breach on lower sides.