Gold to trade lower today; Silver sideways: Karvy

Karvy Commodities Broking has come out with its report on bullion and energy. According to the research firm, gold is expected to trade lower in today's trading session. The silver market has been trading in a sideways fashion for the past four weeks. One can expect the same trend to continue in silver today as well.

Gold: Today is going to be another alarming session for gold. We are expecting the volatility to grow in today's market. The fragile euro is making the market worse; asset classes have remained lower as optimism from the Cyprus bailout faded. Therefore, we are expecting the euro to remain weak in today's trading session. There are no data expected from the euro-zone today. This should keep gold prices on a bearish trend today. We also expect the market to remain mostly in a holding pattern. Equities might continue to stay bearish, currencies might extend their weakness which should have a negative impact on gold. As the day proceeds, gold would most likely take cues from the euro's performance. As for economic indicators, we have a few from the US in the form of durable goods orders, new home sales, which are expected to be better-than-expected which could have a positive impact on the dollar. Gold might come under pressure due to these factors. Overall, we expect gold to trade lower in today's trading session. The domestic gold market however is going to be a little mixed. The rupee is depreciating today from its previous day's gain, which should support MCX gold to trade higher or restrict it from making a huge loss. Interestingly, ETF numbers have remained unchanged for the last three days at 1221.26 tons.

Silver: This morning, silver is seen trading flat at $28.80. We expect the market to remain steady today. However, any further weakness in gold bullion and base metals should pull silver prices down. The equities, which have been in negative territory since this morning, added pressure to silver prices. On the technical front, the silver market has been trading in a sideways fashion for the past four weeks. We expect the same trend to continue in silver today as well.

Crude Oil: Today morning, oil prices are trading at $94.7/bbl (-0.07%) in international market. This might be a technical correction on oil prices driven by Euro-zone economic concern related to Cyprus bailout. Most of the Asian equities and other asset classes are trading down on fear that the bank restructuring plan to be employed in Cyprus could be used in other European nations which will lead to lower liquidity. As we proceed for the day, we expect oil prices to recover from its marginal loss and trade on higher side with an eye on BRIC summit starting from today. The group of leading emerging markets (Brazil, Russia, India, China and South Africa) is expected to establish a development bank that will aim at reforming the existing political and economic world order. Secondly, Bank of Japan have kept the long term bond buying options with 2% inflation target to be achieve in two years. Thus, speculation of easing from Japan may continue to support oil to take positive cues. There are no major economic releases scheduled from Euro-zone today. So, concern related to Cyprus bailout may limit gains in oil prices during European hours. From the US, economic releases in the form of durable goods orders, manufacturing index and new home sales may show a sign of positive growth in economy. This may support oil prices to trade on a positive trend during the US hours. Technically, we suggest remaining on buying side for the day.

Natural Gas: This morning, gas prices are trading at $3.89/mmbtu with a marginal gain of 0.10% in the international market. This might be a technical recovery on expectation of higher US gas. Centrica Plc, the U.K.’s largest household energy supplier, signed a 20-year deal to import natural gas from the U.S., securing supplies as production from British North Sea fields decline. However, as we proceed for the day we expect gas prices to come under pressure as CNPC, have started extracting gas from the 100 year old gas field in Peru. According to MDA Weather services, the weather is expected to remain normal for the coming 6-10 days in the US. This may not bring higher demand for gas and continue to keep its prices under pressure. Overall, we suggest remaining on selling side for the day in this commodity.

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