Intraday Outlook

Bullion:

Gold: Gold enticed by the bargain hunters and fortified by the poor economic health, ticked new life high in Euro and Swiss Franc amid twin fears of currency debasement and heightened inflation expectation. Investors grabbed the opportunity of keeping gold in portfolio whenever it took slight dip. This zeal would have stirred the Asian investors who have carried forward the same and thereby not letting the metal to come down at the early Globex.  Asian shares as well crawled back propelled by the developments from Europe with Euro showing strength. Going ahead, we expect gold to extend its rally after Chinese firm Zhongrun Resources Investment Corp has granted a premium buy of 42% stake in Noble Mineral Resources Ltd for AUD85 million ($88 million), sending shares of the Australian gold miner soaring 25%. Recent M&A activities from China would have been a clear indication of augmented gold demand. From the economic data front, the US consumer spending is likely to fall while Michigan confidence may also remain weak. These all indicate a weaker dollar. Euro is likely to stay firm today which will also be supporting gold to bid high. Said so, we recommend staying long for the metal from lower levels.

Silver: Silver futures prices have also continued to extend the rally at the early Globex followed from the cheering Spanish austerity and a stronger Euro. Going ahead we expect silver too to remain strong for the day. As discussed in gold’s outlook, the US personal spending and income is likely to remain at a weaker note especially after poor GDP numbers and hence silver may draw refuge buying. We therefore recommend staying long for the metal from lower level.

Energy:

Crude Oil: Oil futures prices are trading above $92/bbl with gain of more than 0.20 percent from yesterday’s closing. Fall in Japan Industrial production in the last month reported today morning , might be limiting gains on concern of declining demand from third largest energy consumer. Most of the Asain equities have rebounded which might be adding some positive cues other than Iran Premium. Continuous oppose from Israel on Iran to stop the nuclear program is creating concern of military strike between two nations, which is creating premium on oil futures on concern of supply disturbances. There is 50 percent chance of tropical cyclone formation near to PADD V region, which may create some concern of supply disturbances and may add some points on higher side. Ahead of Spain stress test result to be declared on today, Euro may remain subdued which may limit gains oil futures. From economic data front, US personal income and consumption are likely to fall and may create concern of lower demand from largest oil consuming nation. Overall, we may expect oil prices to lose its yesterday’s gain slowly throughout the day.Action Plan: We may suggest remaining on selling side for the day from higher level.

Natural Gas: Currently, natural gas prices are trading above $3.296/MMBTU almost flat in Globex electronic platform. As per National Hurricane Centre, tropical storm Miriam has reached category 2 level of Hurricane near to PADD IV region accounts for more gas production in US. There is another 50 percent chance of tropical cyclone formation near to PADD V region, which may create some concern of supply disturbances and may add some points on higher side. MDA Earth Sat, another leading weather forecaster, said the 6 to 10-day forecast period would see cooler temperatures. Thus, speculation of rising demand for space heating purpose may support gas prices to trade on higher side. As per EIA, storage has increase by 80 BCF, which is lower than last year injection at the same time. Ahead of natural gas rig counts, we may expect gas prices to continue its upside trend for the day. Action Point: We suggest remaining on buying side for the day.

Non Agri-Reports:

Metals : Today morning base metals are trading slightly up by 0.2 to 0.3 percent at LME electronic platform supported by upbeat sentiments after the positive news from Europe. The Asian equities are also trading up by 0.5 percent taking cues from the western counterparts and early morning Japanese releases. The Japanese manufacturing improved along with higher retail figures and boosted riskier assets including base metals. However, the Industrial production remained weak and continued to support restricted gains in base metals. From day after tomorrow, onwards the Chinese bourses would remain closed for the 10 days long mid-autumn festival holidays coupled with the end of the quarter. Hence, investors might book positions or square off to cut risks of their positions and may restrict much gain for the session ahead. Further from Europe, the Rajoy government approved tax on lottery winnings, cut in ministries spending to limit the deficit from 6.3 to 4.5 percent of GDP in 2013, and may continue to support the shared currency. The local unit may also take cues, may continue to strengthen against the greenback, and may limit gains at MCX platform. Early, morning the rupee has also appreciated nearly 50 paisa and hence we may witness base metals to open at a weaken note at our domestic market. As the day progresses, we expect base metals to remain biased towards higher side taking cues from the Asian and Euro-zone optimism and positive developments. Further, at the spot front, activities are likely to increase ahead of the 10 days holiday’s in China (the largest consumer). From the economic data front, the Euro-zone CPI is likely to cool with an increase in German retail sales and may further extend support to the shared currency providing gains to base metals. While in the evening, the US releases of personal income and spending may continue to weaken after a fall in GDP and limit gains in base metals. Overall, we recommend remaining on the buying side till the evening post which metals