Nirmal Bang puts buy on gold, suggests shorting copper

Kunal Shah, Nirmal Bang Commodities recommends a buy on gold for a traget of Rs 30,300-30,350 per 10 gm. However, structurally he is bearish on gold.

The two main reasons for gold to see an up move is poor non-farm payroll number, which in turn would result in tapering delay by Fed and second being downgrade of US gross domestic product (GDP) of 0.5-0.6 percent going forward. Speaking to CNBC-TV18 he says, copper prices are likely to slip because of supply glut on back of increase in production by China and Peru. He advises going short on MCX copper at Rs 454-455 per kg with a stop loss placed above Rs 459 per kg and for a target of Rs 448 per kg. Also read: Dollar pain may spell further gains for gold Below is the verbatim transcript of his interview on CNBC-TV18 Q: What would you be recommending to investors on gold considering the fillip that we saw overnight? A: The non-farm payroll number was bullish for gold. That means two things; one is that there is going to be a delay in tapering and second is the US gross domestic product (GDP) may get a downgrade of 0.5 to 0.6 percent going forward. So, these two remains the main reason for gold to move up. We believe there maybe some more upside of USD 15-20 on COMEX. Therefore, one can go long from trading aspect. We expect gold to test Rs 30,300-30,350 per 10g on Multi Commodity Exchange (MCX), but we structurally remain bearish on gold. So, this is just a trading buy we are recommending. Q: What about base metal, copper in particular? A: In spite of the fact that there is a lot of optimism coming from Europe and even from China that the trade numbers are very bullish, we feel that copper is going to go down because there is a supply glut. We have seen Chinese production has moved up by 20 percent and at the same time Peru production is moving up by 16 percent for copper on year-on-year basis and that is a very bearish signal for copper. In the last one month the Shanghai copper stocks have moved up by 16 percent so, all the reasons for copper to go down. We recommend going short in MCX copper at Rs 454-455 per kg with a stop loss placed above Rs 459 per kg and we expect copper prices to drop till levels of Rs 448 per kg. Disclosure: We have made these recommendations and I am not holding any of the commodities I have recommended.