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KASB Securities Limited and Economics Research- Commodities Corner

Karachi: According to KASB Securities Limited,

• Gold capped off a decent week with 5% gains but also encountered selling pressure, due to renewed investor risk appetite.

• From a technical perspective, gold’s Stochastic Oscillator and RSI maintain their respective downtrends as well as their sell signals.

• The first support is at $1,734.70 and second support is at $1,722.71. The first resistance is at $1,759.30 and the second resistance is at $1,771.29.

Gold continues descending from record heights
Gold lost further ground on Friday as profit selling and general improvement in investors risk appetite kept the metal under pressure. Global stock markets rallied after a ban was imposed on short selling of stocks by European FI’s. This came as a welcome move as recently the European markets had fallen victim to massive selling due to their exposure in EU sovereign debt. The outgoing week was a mixed one as major gains during the first three sessions were clipped during the last two days, culminating in a net 5% increase in gold prices WoW.

Technical Strategy: Sell on Strength
Gold remained under pressure throughout the session however witnessed recovery from its session’s low only to close in the red. Moreover it registered a lower high and a lower low. This is bearish. The Stochastic Oscillator and RSI maintain their respective downtrends as well as their sell signals. Moreover the MACD has topped out and could potentially assume a downtrend in the near term. The first support is at $1,734.70 and second support is at $1,722.71. The first resistance is at $1,759.30 and the second resistance is at $1,771.29.

WTI Spot (Crude Oil)

• Crude prices went through mild pruning as the Preliminary UoM Consumer Sentiment Index fell to 54.9, the worst reading since 1980.

• From a technical perspective, WTI’s Stochastic Oscillator maintains its uptrend as well as buy signal, while the RSI is neutral.

• The first support is at $84.63 and second support is at $83.88. The first resistance is at $86.13 and the second resistance is at $86.88.

Oil weakens on dull consumer sentiment
WTI crude ended lower on Friday bringing the whole week’s losses to 1.7% as a depressed consumer sentiment index cast a gloomy outlook. The index recorded its worst reading since 1980 and reminded of depressed economic conditions. Aiding oil’s downtrend further was a contraction in industrial production numbers for the Euro zone that entered negative territory in June.

Technical Strategy: Buy on Weakness
WTI opened in the green however failed to sustain its high to close off the session in the red. Moreover it reacted from close to its critical resistance level at $86.61 as well as its 400‐DMA (not shown). The Stochastic Oscillator maintains its uptrend as well as its’ buy signal, while the RSI is neutral. Moreover the MACD has potentially bottomed out and could assume an uptrend in the near term. The first support is at $84.63 and second support is at $83.88. The first resistance is at $86.13 and the second resistance is at $86.88.

Silver Spot

• Silver prices inched up on Friday completely insulated from a decent correction in prices of its yellow peer.

• From a technical perspective, silver’s Stochastic Oscillator maintains its uptrend as well as its’ buy signal while the RSI has shown marginal improvement.

• The first support is at $38.59 and second support at $38.07. The first resistance is at $39.70 and the second resistance is at $40.29.

Silver adopts a divergent path from gold
Silver ticked higher accompanied by other precious metals (Platinum +0.28%, Palladium +0.27%) and gained a modest 1.9% WoW. Later today, investors await a key barometer of manufacturing activity, the Empire State Manufacturing Index, which is expected to achieve a reading of 0.8.

Technical Strategy: Buy on Weakness
Silver remained relatively range‐bound to close in the green. Its formation suggests that it is consolidating around the 30‐DMA and the 100‐DMA. The Stochastic Oscillator maintains its uptrend as well as its’ buy signal while the RSI has shown marginal improvement. The first support is at $38.59 and second support at $38.07. The first resistance is at $39.70 and the second resistance is at $40.29.

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