Gold shines

Gold outperformed other two precious metals by a wide margin giving 10.2 per cent return in 2011. Gold continued its long-term uptrend, until it peaked, registering a life time high at $1920 in early September.

The YTD gain till this peak was 35 per cent. Silver outpaced gold and platinum by accelerating 60 per cent in short span of four months, to register its all-time high at $49.5 in late April.

However, once it reversed, Silver was volatile and started underperforming. It finished the year down 10.3 per cent.

Platinum consolidated sideways in a broad range between $1650 and $1900, till it peaked out in late August. It gave only 8 per cent returns till its August peak of $1,912. Nevertheless, it performed the worst in 2011 by tumbling 27 per cent from its August peak and has slipped 21.2 per cent in the year.

Outlook

Gold will continue to do better than other precious metals in the year ahead. After plunging 18.6 per cent from its 2011 peak, gold is currently testing key support level at $1,550. An upward reversal from this support will lift the gold higher to $1,618 levels in the short-term.

Only a strong up move above $1,750 will reverse the ongoing downtrend and take the gold higher to $1,830 and then to $1,900. But its intermediate-term trend is down and a break through of the key support level at $1,550 will pull the yellow metal down to $1,400-1,430 in the medium-term.

Silver too is hovering around a significant support at $27. Conclusive breach of this support will pull the silver down to $24 initially and then to $ 21.

Investors with long-term perspective can keep an eye on the commodities long-term support band between $17 and $18. On the upside, silver has important long-term resistance at $38. An emphatic rally above this resistance can lift silver higher to $44 and $48 in the long-term. Key short-term resistance is at $33.

Platinum broke through its key support at $1,700 and $1,500 decisively in 2011. However, it is currently testing its next key long-term support zone between $1,300 and $1,340. Emphatic dive below this support band can pull platinum down to $1,200 and to $1,100 in the long-term.

On the other hand, a reversal up from the aforementioned key support will lead it to the resistance at $1,500. Only a strong move above $1,650-1,700 zone will alter the medium-term downtrend and take the commodity higher to $1,800 and to $1,900 in the same time period.

Energy

Natural gas witnessed a bad year 2011, as it tumbled 32 per cent compared with 2010's decline of 21 per cent. Light crude oil has, on the other hand, given a positive 8 per cent return in 2011. The natural gas has been on a long-term downtrend ever since it peaked out at $13.7 in mid-2008.

It is testing its long-term support at $3, an upward reversal from this support will take the natural gas northwards to $3.3 and to $3.8. Next resistances are positioned at $4.5 and $5, which is significant from a long-term horizon. However, inability to move above $ 3.3 will imply weakness and pull the commodity lower to $ 2.4 and than to $ 1.85 in the long-term.

After vacillating between 2011 high of $ 114.8 and low of $ 74.9, light crude completed the year gaining 7.4 per cent. It continues to be in a long-term uptrend since bottoming out in first quarter of 2009. Taking support at the light crude's significant long-term support level at $ 75 in October 2011, light crude resumed its uptrend.

Since mid-November, light crude has been testing a key long-term resistance level at $100, which is also a psychological resistance.

A strong breakthrough of $100 will push the commodity higher to $106 and then to $115 in the medium-term. Emphatic penetration of the hurdle $115 can accelerate the commodity higher to $123 or to $ 130 in the long-term. Immediate support is at $ 90. Decline below $90 will drag the commodity lower to $85 or $80 in the medium-term.

As long as light crude trades above $75, its long-term outlook remains bullish. A tumble below $75 will mar the view and pull it down to $65. Subsequent support is at $ 55.

Base metals

Aluminium: Generic 1st '09' futures that trades in Multi Commodity Exchange of India has fallen only 5 per cent compared with copper that slumped 7.6 per cent and zinc that fell 9.6 per cent for 2011.

The outlook of copper appears optimistic for the year ahead. Copper generic 1 st ‘Y0' future has been on a long-term uptrend since bottoming out at December 2008 low of around Rs 138.

In October 2011, it took support at its long-term base level of Rs 340 and started to move higher, it appears to have resumed its uptrend.

The long-term uptrend will stay positive as long as it trades above Rs 265. Strong move above Rs 438 will lift the commodity higher to Rs 465 and to Rs 500 in the long-term.

Long-term trend in aluminium is also up since turning around in early 2009. It is trading just above the key psychological support of Rs 100 and its 38.2 per cent fibonacci retracement level of its prior up move.

A strong decline below this support will pull the commodity down to Rs 85 to Rs 90 band in the medium-term.

On the upside, break through of Rs 115 will take aluminium northwards to Rs 115 and to Rs 124. Next resistances are pegged at Rs 130 and Rs 144. Zinc is in a sideways consolidation phase in a broad range between Rs 90 and Rs 110.

Agri-commodities

In the agri-commodities space, guar gum and guar seed have witnessed a spectacular rally in 2011. Guar gum (closed at Rs 23,379) has jumped 272 times and guar seed (closed at Rs 7,051) has advanced 192 times, both appears to be in a bubble zone and in the ensuing year both can experience corrective declines. Guar gum can decline to Rs 15,000 levels and guar seed can fall to Rs 5,000 in the upcoming year. Chana (Rs 1,097) finished the year with 48.6 per cent gains. —

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