Expect gold price to correct in short-term; Phillip Cap

Rajini Panicker, head of commodities at Phillip Capital shared her reading and outlook on commodities like gold and copper. In the short-term, she expects gold prices to correct from the current levels to about USD 1,670 per ounce.

"If USD 1,670 is breached then it can go down to USD 1,610 per ounce or USD 1,590 per ounce levels, she said in an interview to CNBC-TV18. In the domestic market, resistance for gold is seen at Rs 32,200 per 10g. "For MCX February, on the downside, we could see support of Rs 30,700 per 10g being tested. If that is breached then it would indicate further weakness in gold," she added. Meanwhile, she see Rs 441 as good support level for copper. Below is an edited transcript of Rajini Panicker’s interview on CNBC-TV18. Q: A word on gold and how are you approaching trade there? A: We are noticing good investment demand. Gold ETF purchases globally has increased by 12 percent year on year as well as the non commercial long position holdings, as reported by the Commodity Futures Trading Commission (CFTC) shows that on year on year basis, funds have increased their net long positions in gold by 48 percent. There is a lot of investment demand there, that continues to provide an impetus for gold. Gold is in overbought territory on a long-term chart. This is because it’s the13th year of its bull phase. Therefore, the upsides would get a bit more difficult as longs would be a little reluctant chasing such an overbought market. On a medium-term basis, we need to see gold breaching USD 1,800 an ounce for further upside. Only on a breach of that level, can we see further gains. For the short-term, we won’t be surprised to see a correction in gold to about USD 1,670 per ounce and with the breach of USD 1,670 per ounce, gold can even go down to USD 1,610 or USD 1,590 per ounce levels. On domestic MCX February contract, resistance is seen coming in at around Rs 32,200 per 10g. On the downside, we could see support of Rs 30,700 per 10g being tested. If that is breached then it would indicate further weakness in gold. Q: Would you be bullish on copper? A: With copper we have seen substantial declines; currently it is placed with some positive data coming out of China. The HSBC PMI data showed Chinese economy to be in an up movement after experiencing contraction for nearly 13 months. It showed a reading above 50 after 13 consecutive months. That supports copper, crude oil and the fact that both these counters have seen heavy selling. For the MCX copper in February contract we see Rs 441 level holding as a good support levels. If we see a breach of Rs 450, we would see copper testing at about Rs 460 levels.