News Column

KASB Securities Limited and Economics Research - Commodities Corner

June 17, 2014



Commodities steady on geopolitical tensions

Gold steady on safe haven buying: Gold prices closed slightly higher on Monday after hitting a three week high. More safe-haven demand was featured as geopolitical tensions are on the rise.

The situation in Iraq deteriorated during the weekend as the Sunni rebel group, which is trying to gain control of Iraq, claimed it had executed 1,700 Iraqi Shiite government soldiers. However, gold prices backed down after profit taking surfaced following recent gains.

Oil settles near yearly high on geo-political unrest: U.S. crude prices were steady as the market awaits more news on the geopolitical front. Russia-Ukraine tensions are still running high as Russia has cut the natural gas supply to Ukraine and said it will resume supply only if paid in advance. Meanwhile, tensions in Iraq also continue to drive oil prices.

Time Currency Impact Event

17 th June 2014 Tuesday

5:30pm USD High Building Permits 1.07M 1.08M

5:30pm USD Medium Core CPI m/m 0.2% 0.2%

5:30pm USD Medium CPI m/m 0.2% 0.3%

18 th June 2014 Wednesday

5:30pm USD Medium Current Account - 2.6B

7:30pm USD Medium Crude Oil Inventories - -

11:00pm USD High FOMC Economic Projections - -

11:00pm USD High FOMC Statement - -

11:00pm USD Medium Federal Funds Rate (greater than)0.25% (greater than)0.25%

11:30pm USD High FOMC Press Conference - -

Gold Spot

Technical Strategy: Play the range

Gold closed at US$1,271, below the 50 - DMA which is at US$1,285. However, RSI and Stochastic are bullish and suggest higher prices in the foreseeable future. KASB Securities Limited recommends playing the range of US$1,264 (20 - DMA) - US$1,278 (30 - DMA). A break below US$1,264 can target US$1,257; while a break above US$1,278 can target US$1,285.

Silver Spot

Technical Strategy: Buy on Weakness

Silver closed at US$19.63, above the 5 - DMA which is at US$19.52. RSI and Stochastic are bullish and suggest higher prices in the near future. KASB Securities Limited recommends buying on weakness above US$19.52 targeting US$19.78 (Upper Bollinger) with stops below US$19.38 (50 - DMA).

WTI Spot (Crude Oil)

Technical Strategy: Play the range

Oil closed at US$106.57, above the 5 - DMA which is at US$106.27. However, RSI and Stochastic are overbought and suggest that the upside is limited. KASB Securities Limited recommends playing the range of US$106.27 - US$107.65 (Weekly High). A break below US$106.27 can target US$105.46; while a break above US$107.85 can target US$108.32.


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Source: Pakistan Press International


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