Buy crude, gold and silver: Experts

Crude prices have been going down, while gold is rising on Euro zone crisis.  Naveen Mathur, associate director- commodities & currencies at Angel Broking expects some bounce back in crude prices. “We expect Nymex crude to touch about USD 88-89 per barrel. We are advising to buy crude on MCX somewhere at Rs 4,700 per barrel,” he adds.

According to Ashok Mittal, chief executive officer of Emkay Commodities, gold still has an upside. “If somebody wants to trade intraday, we recommend to buy gold on the MCX at around Rs 29,900 per 10 grams, stop loss to be put in at Rs 29,750 per 10 grams and we are expecting targets by evening at around Rs 30,150-Rs 30,200 per 10 grams,” he adds.

Mittal is also bullish on silver. “Recommendation for today would be to buy silver,” he adds.

Also read: End of the commodity boom is no disaster

Below is the edited transcript of the interview with CNBC-TV18's Mitali Mukherjee and Sonia Shenoy. Also watch the accompanying video.

Q: You are buying crude. How are you trading this and with what targets?

Mittal: The correction in crude oil was very sharp. We expect some bounce back to happen. We expect Nymex crude to touch about USD 88-89 per barrel. So, one has a scope of about USD 2-3 per barrel on the upside. We have seen good amount of support happening at USD 80-82 per barrel levels. So, we expect that the upside momentum should continue for some more time. Although the fundamentals are not very strong, but the technical bounce back and some short covering should take it slightly more on the upside.

Dollar-rupee should be more or less stable. So, it is only on the international prices front.  If we see USD 2 per barrel upside from here, it will be almost about Rs 100 upside. So, we are advising to buy somewhere on MCX at Rs 4,700 per barrel, keep a stop loss of about USD 1 per barrel and target of USD 2 per barrel. That means Rs 50 per barrel stop loss and about Rs 100 per barrel target from those levels.

Q: The one that really has begun to spike back because of this risk environment is gold. What kind of upside do you trade that one with?

Mathur: I think gold still has an upside. The risk sentiment still prevails on the negative territory. We still do not have anything much to talk about on the Euro. Yesterday’s policy meeting of the G7 nations also didn’t came out with any concrete measures, but they are talking that they will do something about the Euro. There is a grand bargaining happening from the Germany side, they are talking about euro bonds. They are giving some kind of a leverage for extra bailouts and if the other member countries on the Euro also goes up.

But, at the same time, if you see the data coming out from the US is moderating, it’s a slow trajectory of growth. Unemployment rate, the non-farm payrolls increased not to an extent the way they should have been during the year. Also, at the same time, unemployment rate has gone up from 8.1% to 8.2%. All of that is going to lead to some sideways movement for the gold in the near-term. Sideways means between USD 1,550 to 1,650-1,675 per ounce levels in the international markets.

Rupee will play a very crucial role. Since the headwinds are towards little depreciative tone on the rupee leading to emerging market scenario and the capital outflows and all the domestic problems, we feel the rupee term gold would stabilise at around Rs 29,000-Rs 29,500 per 10 grams levels, but we are bullish.

If somebody wants to trade intraday, we recommend to buy gold on the MCX at around Rs 29,900 per 10 grams, stop loss to be put in at Rs 29,750 per 10 grams and we are expecting targets by evening at around Rs 30,150-Rs 30,200 per 10 grams.

Q: You are also buying the much more volatile silver, right?

Mathur: Yes, that is right. The base metal pack although does not sound to be too good. The Chinese factor, the manufacturing data coming out from the Euro or slowing down of the US markets, but still at the same time since the precious metal sector particularly gold looks little bullish on the northward direction, we are still keeping our eyes on the upside for silver. Therefore, recommendation for today would be to buy silver.

Q: What do you do with some of those base metals like a copper?

Mittal: I think overall the sentiment is more or less dull because LME is not working for last few days and that will open today. So that will decide the direction. Overall, we are expecting a dip to happen because of rupee factor as well as on the international front. So, initially we expect some kind of a correction, but then we do expect some bounce back happening. Buying on dip should be the strategy for copper. So, we should watch Rs 400, while going short or going long. If that holds on then we expect good amount of bounce back to happen from there.