Momentum in gold to remain weak: Phillip Capital

Gold and silver have been soft in domestic market in the last few days. Bullion has been correcting globally as well. Crude has not done anything special.

Rajini Panicker, head of commodities-research, Phillip Capital believes that momentum in gold will continue to remain weak, given that it has breached the 200-day moving average of USD 1,680 per ounce. She advises investors to look for crucial levels of USD 1,640 and USD 1,610 per ounce on gold. “If USD 1,610 per ounce is breached then gold could be seen going down to about USD 1,580 per ounce levels,” she adds. Also read: Sell Copper with stoploss above Rs 451, says Nirmal Bang Below is the edited transcript of her interview on CNBC-TV18 Q: Gold has been on a weakening streak over the last couple of days. Do you see more downside? A: Gold has definitely been weakening. In fact last night gold came down by 1.6 percent. Technically it has breached a very crucial support level that is the 200 day moving average, which comes in around USD 1,680 per ounce levels. We continue to think that the momentum in gold will remain weak given this breach. Look for levels closer to about USD 1,640 per ounce and USD 1,610 per ounce more crucially. If USD 1,610 per ounce is breached then gold could be seen going down to about USD 1,580 per ounce levels. I had reiterated two weeks ago that given gold is in its 13th consecutive year of a bullish phase, it will be difficult to find people holding on to it and could find liquidation interest. The trend was weak in gold as its being trending below USD 1,760 per ounce levels for some time now. Q: What are you seeing in some of the industrial metal faces because some of the stocks in the equity market have rallied? Are industrials beginning to rally in the mother market? A: We are finding support for base metals primarily because China has shown some signs of expansion in terms of economic activity after seeing a contraction for over 13 months. Therefore, though copper has breached its downside support levels, there has been a rebound following this positive data out of China. On the London Metal Exchange (LME), as long as copper is trading above USD 7,900 per tonne levels, it could target levels closer to USD 8,300 per tonne to about USD 8,500 per tonne. That indicates, on the MCX February if copper breaches Rs 451 per kg on the upside, we could see gains to about Rs 460-465 per kg.