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Commodity outlook by Tradebulls Securities: Sell gold, buy zinc

Gold and Silver: Bulls speculators took a breather after 5 week strong run. The gross bullish position fell by -6597 contracts, while short position advanced by 7586 contracts indicating that bulls are clearly booking profit. Silver has outperformed gold this week and continues to do so. Finally, silver has breached $15.50 on the upside and next target comes at $16.

Yesterday’s better than expected core retail sales of US prompted selling in gold and US Dollar index also tested 97 levels. Weak Euro and Pound are pushing US dollar stronger which is creating headwinds for gold. We believe going next week, silver should be on investor’s radar as sentiment is changing in silver. The reason for holding long gold hasn’t gone away but we could see some nervous long in the market as prices are struggling to make a new high. If we are selling, it’s not because we are creating a short position but only reducing our exposure.

Base metals: They showed mix pictures with lead dragging its feet and Nickel flying high. The ban on Indonesia is lifting the prices up and it is coming near the overbought zone. Zinc and Copper are trading sideways while huge LME inventory in Aluminum is keeping prices under pressure. China’s slow GDP is also not helping base metal prices and we expect base metals to see any momentum on the upside if US Fed cuts interest rate.

Courtesy - Business Standard



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