News Column

KASB Securities Limited and Economics Research - Commodities Corner

August 27, 2014

Oil trades near three€ day high before supply data

Gold declines on strong US economy growth: Gold held below US$1300/oz as investor confidence was restored by a strengthening US economy. Although gold is helped by some safe€ haven demand arising from geopolitical tensions, it is outweighed by the fact that US economic data continues to show good growth. We expect a strong dollar and momentum in equities to continue to pressurize prices going forward.

Oil gains upon positive economic sentiment: WTI climbed as US durable goods data and consumer confidence boosted economic optimism. Moreover, a government report expected tomorrow is likely to show that US crude supplies fell 2.5mn barrels last week.

On the geopolitical front, Russian President Vladimir Putin began talks with his Ukrainian counterpart, Petro Poroshenko, as tensions flared on the two nations' border.

Time Currency Impact Event Forecast Previous

27th August 2014 Wednesday

7:30pm USD Medium Crude Oil Inventories 1.1M -4.5M

28 th August 2014 Thursday

5:30pm USD High Prelim GDP q/q 3.90% 4.00%

5:30pm USD High Unemployment Claims 299K 298K

7:00pm USD High Pending Home Sales m/m 0.60% -1.10%

Gold Spot

Technical Strategy: Play the range

Gold closed at US$1,281, below the 200 - DMA which is at US$1,284. However, RSI and Stochastic are neutral and suggest that the downside is limited. We recommend playing the range of US$1,272 (Last week's low) - US$1,284. A break below US$1,272 can target US$1,264; while above US$1,284 can target US$1,292 (10 - DMA).

Silver Spot

Technical Strategy: Sell on Strength

Silver closed at US$19.32, below the 10 - DMA which is at US$19.44. RSI and Stochastic are bearish and suggest lower prices. We recommend selling on strength below US$19.44 targeting US$19.29 with stops above US$19.63 (15 - DMA).

WTI Spot (Crude Oil)

Technical Strategy: Play the range

Oil closed at US$93.80, below the 15 - DMA which is at US$94.87. However, RSI and Stochastic are bullish and suggest higher prices in the near term. We recommend playing the range of US$93.04 (Weekly Low) - US$94.87. A break below US$93.04 can target US$92.61; while a break above US$94.87 can target US$95.55 (20 - DMA).

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Source: Pakistan Press International

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