Copper marginally high

Base metals: Copper higher on US existing home sales
data
Yesterday, copper closed with minor gains on the COMEX as
the US existing home sales data topped the forecast. Sales
of previously-owned homes in the USA grew by 3.1% in July.
However, on the flip side unsold inventory rose. There were
record 4.67 million unsold houses and condos on the market
in July, representing 11.2 month's supply at the current sales
pace, matching the highest ever. The jump in the inventory
was driven by an increase in the supply of condos, as projects
started one or two years ago came on the market, the Realtors
group said.
Yesterday, the London Metal Exchange was closed, so the
trading in the rest of the base metals was in line with that
of copper.
Today, oil prices in Asia rose on concerns that the hurricane
Gustav may disrupt oil operations in the Gulf of Mexico.
However, strong tone in the US Dollar is keeping it down,
though crude oil is expected to find support around $111.
Today, we had German consumer confidence data that
weakened further as fears that Europe's largest economy
will lose more steam than anticipated weighed on the
sentiment. German market research group GfK said that its
forward-looking consumer climate index continued to decline
sharply to 1.5 points for September from a downwardly
revised 1.9 points in August. A Dow Jones Newswires survey
of 14 analysts expected the index at 2.1 points for
September. The Euro is sharply down on this data and has
fallen below its low around 1.4630. The Euro could fall to
1.44 in this cycle. This is bearish for the base metals.
In a further bearish development for the base metals, we
see that China's production is climbing. China's zinc mines
increased their output by 21% in July compared with a yearago
period, producing 331,200 metric tonne of the metal,
while lead production gained 23% to 212,700 tonne in the
same month. Copper output climbed 6% to 2,34,900 tonne.
Various reports suggest that Chinese, the world's biggest
buyers of copper have put off purchases on expectations of
further price decline amid rising US Dollar.
We still remain bearish on copper. A slide in copper could
lead to a downward movement in all the base metals.
Bullion: Flat close
Yesterday, the bullion complex had a flat closing as spot
gold closed nearly $1 lower, while silver was up nearly 17
Cents. Today the complex is taking a hit on sliding Euro. As
crude is expected to stabilise around $111 and a decent
pick up in physical demand for gold is being witnessed at
lower levels, gold could find a support around $800, while
silver could find support around $13.
Sharp plunge in bullion prices in August is due to massive
sell off by some of the US Banks. In short-term as the US
Dollar rises we would see further pressure on gold and silver,
however with festival season round the corner and the US
Dollar fast approaching its short-term target of 1.44/1.43
against the Euro, downside in bullion appears to be limited.
A slip below $800 could take the spot gold to $780. Similarly,
a decisive breach of $13 could take spot silver to $12.40.
These levels could very well be the bottom for these two
metals.