Gold prices likely to gain further
Near-term outlook for nickel remains weak
G. Chandrashekhar
Mumbai, Aug. 5 Gold could not sustain the pressure of broad sell-off that characterised the equities and commodities markets last week. Investors pulled out from most markets.
The status of gold as a safe haven investment thus took a hit. The yellow metal tracked the dollar. How soon will investors return to gold is a question everyone is asking. Positive sentiment
In the somewhat murky scenario comes news of increased inflow of gold into ‘streetTRACKS’ gold ETF last month. Gold held in trust rose by 32 tonnes over the month. Total holdings have reached a record 506 tonnes. This is broadly interpreted as positive sentiment towards the yellow metal.
The generally supportive factors such as dollar weakness, firm crude prices, stabilising fabrication demand and geopolitical situation continue to operate. However, slowdown in de-hedging and European Central Bank sales may dampen the sentiment.
According to technical analysts, in the short-term, in the absence of a break below trendline support near $660, signs are increasingly turning bullish. Momentum is pushing higher and the risk is for further gains into the next few days ($680 and trendline resistance at $686). In the medium-term, higher highs are expected. Therefore, strategic buying at every dip may be advisable.Base metals
Concerns on the wider financial markets impacted base metals complex too, which showed mixed performance. Specifically, nickel prices fell below the psychologically important $30,000 a tonne level, reaching an 8-month low.
LME nickel stocks are at their highest level in over a year. Recent news of cutbacks by stainless steel mills has weighed on prices and sentiment.
The near-term outlook for prices continues to remain weak in the light of easing fundamentals and a further downside risk is not ruled out. However, in the medium-term, the market has the potential to rise.
By the fourth quarter of 2007 when de-stocking of stainless steel is expected to be over, nickel prices may rebound.Tin prospects
Lead prices have continued to climb higher. LME stocks have been drawndown. The metal has an upside risk in the light of market’s compelling fundamentals.
Tin prices too are ruling firm (around $16,000/t). Continuing to rise, LME tin stocks now total 14,200 tonnes, the highest level since December 2006. However, a combination of positive sentiment, drawdowns in unreported stocks and tightness in the tin concentrate market bodes well for prices which may push higher, experts assert.
Copper prices continue to be supported by ongoing strike and the concomitant potential for supply disruption.
Technical analysts see the market topping and expect weakness to set in. Near-term support below $7660 is placed at $7532. In the medium-term, the market is expected to retest and likely exceed 2006 peak.Crude
Concerns over future supply availability abound.
Speculation over future OPEC conduct is proving an important sentiment setter at the moment, analysts assert.