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Saturday, September 19th, 2020

KASB Securities Limited and Economics Research- Commodities Corner

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by August 12, 2011 Brokerage

Karachi: Gold Spot

According to KASB Securities Limited,

• Gold finally took a breather in its record shattering rally, as the CME Group raised margins on a 100oz futures contract.

• From a technical perspective, gold’s RSI has shown weakness while the Stochastic Oscillator has generated a sell signal in the overbought region.

• The first support is at $1,751.81 and second support is at $1,739.75. The first resistance is at $1,773.62 and the second resistance is at $1,783.38.

Gold descends from record highs on margin hikes
Gold was volatile in choppy trading and tumbled 1.6% to close in the red after four fruitful sessions. Rumours had been circulating in recent days of a possible margin hike on the cards and the same materialized yesterday. The CME Group hiked margins on a 100oz futures contract by 22% that pulled gold down from its fresh record high. Aiding the descent was a relief rally in US stocks (Dow Jones +3.95%, S&P +4.63%) which saw bargain hunters enter the fray and accumulate on dips after the massive selling spree in equities in recent days.

Technical Strategy: Sell on Strength
Gold took resistance from its critical resistance level of $1,814.57 and witnessed significant pressure to close in the red. The resultant candlestick formation is called a “Dark Cloud Cover” which is indicative of a top. This also establishes the above level as a formidable resistance. The RSI has shown weakness while the Stochastic Oscillator has generated a sell signal in the overbought region. The first support is at $1,751.81 and second support is at $1,739.75. The first resistance is at $1,773.62 and the second resistance is at $1,783.38.

WTI Spot (Crude Oil)

• WTI was supported by an upbeat jobs report showing that initial claims had fallen below market estimates.

• From a technical perspective, WTI’s Stochastic Oscillator has edged up above the oversold region while maintaining its buy signal.

• The first support is at $84.89 and second support is at $83.97. The first resistance is at $87.06 and the second resistance is at $88.39.

Oil gets a lift on buoyant jobs report
Crude persisted in green territory for the second day on the back of an optimistic labour market report that partially eased demand side concerns. The US Labour Dept. reported that initial claims fell to 395k last week, which marked their lowest reading since Apr‐11. Markets shunned aside the threat of French banks getting engulfed in the EU debt crisis and focused on the positives emerging from this report. This marked the second upbeat labour market indicator in less than a week as last Friday saw the unemployment rate trim down to 9.1% and fresh recruitments exceed market estimates.

Technical Strategy: Buy
WTI remained strong throughout the day to close well into the green. The Stochastic Oscillator has edged up above the oversold region while maintaining its buy signal, while the RSI maintains a steady uptrend as well. The first support is at $84.89 and second support is at $83.97. The first resistance is at $87.06 and the second resistance is at $88.39.

Silver Spot

• Silver moved in a range of US$1.92 but encountered selling pressure to close in the red.

• From a technical perspective, silver’s formation is a bullish divergence as despite its negative closing, the Stochastic Oscillator maintains its uptrend as well as buy signal.

• The first support is at $37.97 and second support at $37.19. The first resistance is at $39.39 and the second resistance is at $40.02.

Silver surrenders gains of the previous day
Silver lost 1.4% but held up firmer as compared to gold that lost 1.6%. Investors are likely to track Euro zone industrial production numbers due today with market estimates calling for a mild expansion of 0.1% for the month of June.

Technical Strategy: Buy on Weakness
Silver registered a higher high and a higher low, though closed in the red. The resultant formation is a “Bullish Divergence” as despite its negative closing, the Stochastic Oscillator maintains its uptrend as well as buy signal, having just cleared the oversold region. The first support is at $37.97 and second support at $37.19. The first resistance is at $39.39 and the second resistance is at $40.02.

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