Commodity check



After Mario Draghi's follow up action on his infamous " we will do whatever it takes"  last week, the markets rejoiced as the FED chairman promised to spread more liquidity in the system in a program popularly known as QE3.


The latest program is an open ended purchase of $40 billion a month  mortgage backed securities in addition to continuing Operation twist which aims to lower longer term treasury bond yields.The combined effect would be $85 billion per month till the end of 2012.


Since the eruption of the financial crisis in 2008 the Fed had spent $2.3 billion from till 2011 in two rounds of non standard
measures known as QE1 and QE2  and in the process Gold has gone from just about a $1000 to about  $1800 today.


The strategy hence would be to buy on dips especially in both precious metals.


Let's look at charts :


Silver :


Vt Silver 3 Commodity Check


In yesterday's intra day post we spoke about 64700 levels being support as traders booked the gains of the previous session. The news on foreign inflows strengthening the Indian currency lead to some profit booking and silver could not climb higher even though COMEX futures held on to the gains.


A crossover of 64750 early in the week can still give a 1000 point rise to 65800 where the market should consolidate for a few sessions.


65470 and 63220 are the HVN's marked in the chart and 63580 and 64700 the LVN's.


63580 is lower level support.


Gold :


Vt Gold 2 Commodity Check


Gold's profile chart from last Friday shows a tight range around 31880 which is also the HVN now.


A move away from this point was rejected on Friday as prices closed at the same level it's known all week.


Support is 31570 marked in red whereas resistance during the week will be at 32420- 32360.


Crude :


Vt Crude 2 Commodity Check


Crude has been working the 5430- 5270 range for the past four weeks with moves above 5430 being sold into and buyers stepping up near 5300 levels.


Profile chart is balancing and developing energy to move out.


5350 continues to hold the bias for a 50 point move either direction.


Value area line at 5292 and 5403 when cleared on a closing basis can give a trending move away from this zone.


Copper :


Vt Copper 1 Commodity Check


Copper has begun to consolidate after the big move from 430 levels.


The HVN at 453 will invite buying effort and the bias will continue looking up above the LVN at 448.


461 and 465 are targets on the upside.