US GDP and ECB Bank Stress Tests and Commodity Trading Tips

Gold Commodity Trading Market review our last week report, we had stated a bearish outlook in gold
wherein we suggested a sell near $1245-1250. Gold is seen trading at $1230 almost going correct in the
weekly outlook however, during the week, we had a little chaotic scenario when gold breached $1250
mark and tested a high of $1256. Nonetheless, we had also highlighted the fact that the commodity may
remain volatile so the same was noticed during that week. Several reasons and strategies we had
explained and the same shall be reiterated in this report and present an outlook for the next week. We
talked about USD performance and its impact on the many asset classes so on gold. The same had
repeated during the week, as of Friday the USD index has gone up again making the gold and other
precious metals lower. Going with the same stance then possibly gold may continue to trade down. In
fact the euro performance which was down; moved along with gold and likely that euro the shared
currency may continue to remain down which can possibly further pull gold prices lower. For the coming
week is concerned, we hold a bearish stance on gold and that looks more apparent however, volatility is
something which cannot be ruled out especially when we have the FOMC meeting scheduled on 29th of
October 2014. The detailed FOMC meeting and its likely impact shall be explained in our in-house
economic report while we believe any strong comment from the Fed would bring down gold further
lower. In fact we are in the same hope that Fed may talk something positive about the economy unlike it
spoiled everyone in the latest minutes.

Now, talking about a little unusual about the market scenario Investors have plenty to be concerned
about: Russian-inspired insurrection in Ukraine, Occupy Central protests in Hong Kong, the swell of
Ebola from Africa to Europe along with the U.S, battle in the Middle East. One thing they can leave off
the list is inflation which was again disappointing in the US and many other countries in the world. So,
we do not talk about anything like inflationary hedging on gold. We talk about the consumption front,
though gold import in India and China rose a tad in the last month possibly due to festival season but we
do not expect the same scenario to persist again in October or November. The data shows, Swiss gold
exports to India almost doubled to 58.5 MT in the last month as per the Swiss customs data showed Oct.
21; volume this month for benchmark spot contract on Shanghai Gold Exchange average 28% more than
this years average. However, we do not expect the same scenario to be seen in October. So, developing
an outlook on gold for the coming week looks persistently bearish.

Lastly, we shall talk about the derivatives front, we saw prices declined a tad in the week where in the
volume has declined a little while the open interests remained higher. This indicates the commodity may
remain mostly volatile while any fresh development could pull down the gold prices. Overall, we hold a
bearish outlook on gold in the next week. As far as strategy is concerned, we recommend selling the
commodity near $1240-1245 (levels where we had suggested in the last week) however; aggressive
trader may sell near $1235/137 and may make a dollar cost averaging from the above mentioned levels
for a possible target of $1222 and then $1210. In any adverse scenario the stop loss should be above the
last week high of $1256 or conservative traders may keep the stop loss above $1266

Gold Weekly Technical Analysis:
Resistance on Upside at 27514-27852-28190
Support on downside at 26964-26752-26414
Trend Deciding level at 27302

Silver Commodity Trading Market, We had a selling bias, wherein we felt largely weaker set of economic
reports from top consumer China and expectations that the big brother gold would see deceleration
from higher levels would continue to put pressure on the commodity. As of latest quote, Silver Comex
Dec contract is weaker by around 0.9% to trade near the $17.20 per ounce mark. In Indian price related
performance was almost similar to Rs 38075 per Kg for the active MCX Contract, volumes however quite
low amidst holidays locally due to Diwali and a truncated last trading day.

As of the major data variables are concerned, we re-iterate the most important cues for the Bullion
segment would continue to be FED meeting wherein cues from US GDP and ECB Bank stress tests would
also be looked upon. Gold and silver considered as a safe haven commodities might see good volatility in
case markets get concerned over some of these issues. While there are no major data variables due
from China next week, the direction for silver commodity would depend mostly on movement in Gold
and Base metals complex. This week we saw the Q2 Chinese GDP data which on a surprising note stood
better than expected to 7.3% against markets forecasts of a reading near 7.2%, wherein broadly traders
were already planning for a further lower number. However, major issues which should be noted is the
fact that Chinese equities notwithstanding the better GDP gauge were the only major global equity
indices to close down this week. Equities fell following some weaker communal paycheck reports and
opportunity that overall the worlds second largest economy would continue to remain subdued in
medium-term. China being major industrial user consumer is likely to continue weigh on silver whereas
rising USDX is another issue which should keep the commodity under pressure. We hold selling bias in
the commodity next week, however looking at US related cues, it is better to sell the whitish metal on
pullback only

Silver Weekly Technical Analysis:
Resistance on Upside at 42010-45945-49880
Support on downside at 31105-24135-20200
Trend Deciding level at 35040

Commodity Trading Tips
Sell Gold Mcx Dec on Rise near 27300 sl 27650 Tgt 27000-26800
Sell Silver Mcx Dec on Rise near 38500 sl 39000 Tgt 38000-37500
Sell Crude Oil Mcx Nov on rise near 5000 sl 5130 Tgt 4870-4820