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KASB Securities Limited and Economics Research

Karachi: Gold Spot

• Gold’s safe‐haven appeal was absent, as the metal slipped with equities ahead of a key Slovak vote to consider raising the size of the EU rescue fund.
• From a technical perspective, gold’s Stochastic Oscillator maintains its buy signal while the RSI maintains a steady uptrend.
• The first support is at $1,649.76 and second support is at $1,628.21. The first resistance is at $1,673.00 and the second resistance is at $1,684.63.

Gold slips ahead of Slovak vote

According to KASB Securities , a key vote scheduled to be held in Slovakia on expanding the size of the EU rescue fund kept financial markets on edge. Gold moved lower, in sync with riskier assets, with its safe‐haven appeal largely absent as investors awaited the outcome of the vote. Slovakia is the only country from the 17‐nation Euro bloc that has yet to approve an increase in the size of the European Financial Stability Fund (EFSF).

Technical Strategy: Buy

Although gold closed in the red, it registered a higher high and a higher low. Moreover its low coincided with the 100‐DMA, above which it gave a breakout on Monday. Its formation is a “Bullish Divergence” as despite its negative closing the Stochastic Oscillator maintains its buy signal while the RSI maintains a steady uptrend. Additionally the MACD has now generated a buy signal. The first support is at $1,649.76 and second support is at $1,628.21. The first resistance is at $1,673.00 and the second resistance is at $1,684.63.

WTI Spot (Crude Oil)

• Oil added further gains bringing a fruitful run to five days despite a reduction in oil demand forecast by OPEC.
• From a technical perspective, WTI’s Stochastic Oscillator, though overbought, maintains its uptrend as well as buy signal.
• The first support is at $84.98 and second support is at $84.12. The first resistance is at $86.65 and the second resistance is at $87.51.

Oil continues its ascendancy

WTI crude extended its winning streak to five sessions paying little heed to oil producing cartel OPEC’s reduction in its global oil demand forecast. OPEC’s revised estimates now call for demand to grow by 0.88mn bpd to 87.81mn bpd in 2011. For 2012, the organization anticipates a modest 1.2mn bpd growth in oil demand. Underlying reasons behind the forecast cut were reduced growth prospects in developed nations, the possibility of a Greek default, and less robust demand in China.

Technical Strategy: Buy on Weakness

WTI opened in the red however recovered to close in the green and marginally above its channel resistance trend-line. Moreover it closed above the 30‐DMA and 50‐DMA. The Stochastic Oscillator, though overbought, maintains its uptrend as well as buy signal while the RSI maintains its general uptrend as well as buy signal. Additionally the MACD maintains its buy signal. The first support is at $84.98 and second support is at $84.12. The first resistance is at $86.65 and the second resistance is at $87.51.

Silver Spot
• Silver traded in a range of US$1.18 but closed the session nominally in the red.
• From a technical perspective, silver’s Stochastic Oscillator maintains a steady uptrend as well as buy signal while the RSI continues to rise as well.
• The first support is at $31.56 and second support at $30.80. The first resistance is at $32.74 and the second resistance is at $33.46.

Silver inches lower

Silver traded in a range of US$1.18 but closed the session nominally in the red. Two FOMC members are due to address seminars today, followed by the release of the much awaited FOMC Meeting Minutes.

Technical Strategy: Buy

Silver remained relatively muted to close flat. Its formation, however, suggests that it is consolidating below its critical resistance of $32.69. The Stochastic Oscillator maintains a steady uptrend as well as buy signal while the RSI continues to rise as well. Moreover the MACD has now generated a buy signal. The first support is at $31.56 and second support at $30.80. The first resistance is at $32.74 and the second resistance is at $33.46.

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