Commodity Daily Update - December 13, 2012 - Edelweiss

Global Update:

Last FOMC meeting of 2012 confirmed the investor speculation that Fed will expand its asset purchases as Federal Reserve said it will buy $45 billion a month of Treasury securities starting in January to spur the economy. It also indicated that the interest rates to remain at the lower level unless and until problems related to Unemployment and Inflation are tackled. US GDP was also forecasted to be in withering shed while Fiscal Cliff discussions are unlikely to be settled before Christmas holidays. We expect Dollar to trade in the sideways to negative range due to aforesaid measures but today's US PPI and Jobless Claims may support the currency for evening session.

Bullion Update:

Precious Metals segment traded volatile as FOMC announced buying of $45 billion a month of Treasury securities starting in January while Fiscal Cliff discussion are going nowhere. Ongoing pessimism at the US is likely to cap the haven demand of precious metal while movement in Rupee may support liquidation of Gold prices. Gold traded below $1700 testing almost $1695 indicating $1680 to be the next level while resistance of $1730 seems strong. Silver traded near $33 with the support being $32.50 with the resistance being $33.80. At MCX, Gold is having the support of 31300 and the resistance being 31500 while Silver is supported by 62500 while the resistance being 63800.

Base Metal Update:

Base Metal complex traded volatile due to FOMC announcement and weaker GDP forecast of US. Copper witnessed shaky moves between $8070 and $8160 while Nickel, Lead and Zinc prices held at the higher end. LME Copper Stockpiles Rise 2.9% to Highest Since March 14 while Nickel Canceled Warrants Fall 5.4% to Lowest Since Nov. 28. We expect base metals to trade sideways to negative with Copper and Nickel having support of 444 and 950 respectively while Lead and Zinc has supports of 123 and 111.5 while the resistances are 125.50 and 113.50.

Energy Update:

Crude Oil tested $87.60, highest level in a week as Fed announced it will expand its asset purchases while IEA raised oil consumption forecast being optimistic on China. OPEC kept its production target unchanged for a second time this year as members judged prices to be sufficiently high. Crude Inventories gained 843,000 barrels last week while gasoline inventories grew 5 million barrels to 217.1 million, the most since April 6. Natural Gas Inventories are forecast to fall by 3 bcf as against the prior drop of 73 bcf. We expect Crude oil prices to trade sideways between $86-88 with the MCX counter being 4650-4800.

Source : Equity Bulls

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