Karachi , January 09, 2014 (PPI-OT): Gold and Silver: lowering forecasts According to KASB Securities Limited , - BofAML lowering 2014 gold & silver forecast: The pressure on gold and silver prices has been relentless in 2013. In BofAML's view, headwinds especially from the macroeconomic environment persist, which is captured by rising US 10?year rates and a persistent lack of inflationary pressures. - Hence, they reduce 2014 gold and silver price forecasts by 11% and 21% to US$1,150 /oz and US$18.38 /oz, respectively. At the same time, and despite the bearish near?term outlook, it is worth noting that both commodities could bottom out in 2014. Miners tighten belt; unexpected inflation a potential upside for gold: KASB Securities Limited ,foresee scope for prices to bottom later this year. As for supply, miners are adjusting to the challenging operating environment and capex curtailments will almost certainly reduce the scope for supply increases going forward. Of course, this caps the number of ounces investors will have to pick up. Meanwhile, on the macro side, although KASB Securities Limited ,- acknowledge that inflation expectations remain subdued for now. Yet, continued apprehension over unexpected inflation on views that the output gap may be much smaller especially in the US could bring gold buyers back into the market. Therefore, this year may provide interesting entry points for gold investors. Oil continued to trade at its 5?wk low: Oil prices traded to its lowest level in 5?weeks as EIA ( Energy Information Administration ) data showed more than expected gains in distillate supplies as demand dropped for crude by 1.14% to trade at US$92.82 a barrel. EIA report showed that crude oil inventories dropped by 2.7mnbbl to 357.9mnbbl in the last week. Table1: BoAML revised gold and silver price forecasts1Q14E 2Q14E 3Q14E 4Q14E 1Q15E 2014E 2015E 2016E LT priceGoldNew 1,200 1,100 1,050 1,250 1,200 1,150 1,256 1,400 1,508Old 1,250 1,275 1,300 1,350 1,300 1,294 1,356 1,550 1,624Change -4.0% -13.7% -19.2% -7.4% -7.7% -11.1% -7.4% -9.7% -7.2%SilverNew 19.00 18.50 17.00 19.00 20.00 18.38 21.63 23.50 24.93Old 20.00 22.50 25.00 25.00 22.50 23.13 24.13 26.00 28.99Change -5.0% -17.8% -32.0% -24.0% -11.1% -20.6% -10.4% -9.6% -14.0%Source: BofA Merrill Lynch Global Commodity Research Key events/data releasesTime Currency Impact Event Forecast Previous9th January 2014 Thursday12:00am USD High FOMC Meeting Minutes - - 6:30pm CAD High Building Permits m/m -2.3% 7.4%6:30pm EUR High ECB Press Conference - - 6:30pm USD High Unemployment Claims 337K 339K10th January 2014 Friday6:30pm CAD High Employment Change 13.3K 21.6K6:30pm CAD High Unemployment Rate 6.9% 6.9%6:30pm USD High Non-Farm Employment Change 194K 203K6:30pm USD High Unemployment Rate 7.0% 7.0%6:30pm USD Medium Average Hourly Earnings m/m 0.2% 0.2% Gold Spot Technical Strategy: Buy on WeaknessGold closed at US$1,226 , above the 23.6% retracement level from US$1,361 - US$1,182 which is at US$1,224 , keeping the bullish bias that has developed over the past week intact. A test of the 50?DMA which is at US$1,240 is likely. KASB Securities Limited recommend buying on weakness above US$1,218 (20?DMA) targeting US$1,240 , with stops below US$1,211 (Horizontal support). Silver SpotTechnical Strategy: Sell on StrengthSilver pushed lower yesterday after breaching the 23.6% retracement level of US$18.87 - US$22.85 which is at US$19.79 . RSI and Stochastic are bearish, hinting at lower prices in the near future. KASB Securities Limited recommend selling on strength below US$19.79 , targeting US$19.41 with stops above US$20.10 . WTI Spot (Crude Oil) Technical Strategy: Buy on WeaknessOil closed at US$92.52 posting a new weekly low of US$92.24 . RSI and Stochastic are oversold in the short term charts, hence of test of 5DMA which is at US$93.38 is likely. KASB Securities Limited recommend buying on weakness above US$92.24 , targeting US$93.38 with stops below US$91.60 .
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