Daily Report 270115 2015-01-27

Main contracts of domestic gold AU 1506 opened lower and continued dropping afterwards in the night session. The bolster effect of 5-day moving average was broken through in short term. Investors should be aware of the rebounding risk. As for operations, previous long positions opened at RMB 247 could be closed. The gold is hardly expected to be able to drop below RMB 263 due to high pressure. Stop-profits should be set for positions opened higher than RMB 258. Short-term short positions could be open during the intraday trading with stop-profits setting at RMB 255 and stop-loss at RMB 260.5. On the whole, the Greek election has come to an end. Although new negotiations are expected to take place between Greece new president and the Euro Zone, the risk is still out there. Besides, the S & P has lowered the rate of Russia to BB-. Tense situation between Russia and Ukraine continues. If the risk-aversion sentiment keeps rising, the gold is likely to increase as well. The overnight gold ETF advanced slightly by 1.79 tons, indicating the funds are holding an optimistic view of the gold. The key of the week is the Fed meeting minutes, which will be released on 3 am Thursday.


Main contracts of domestic silver AG 1506 opened lower and kept declining as well in the night session, dropping down the bolster of 5-day moving average. For short term, the rebounding risk is likely to take place. As for operations, long positions opened at RMB 3600 could be closed around RMB 3800. It is expected that the silver is not be able to pass through RMB 3900. If the silver drops below RMB 3800, short-term short positions are recommended with stop-loss setting at RMB 3840 and stop-profit at RMB 3700. On the whole, the silver is still following the trend of gold and reveals the character of weak metal. As for the foreign market, the silver poses to strong pressure after rallying to $ 18.5. Since December, 2014, the trend of silver ETF is selling silver when the price is high. The overnight silver ETF increased 32.76 tons last Friday, however, the increase is not enough to stimulate the price of silver.

Stock Index

Stock index fluctuated during the intraday trading yesterday. Weighted stocks, such as bank stocks and brokerage stocks kept dropping, however, the stock index closed higher influenced by the middle, small and theme stocks. The process of increasing leverage to the market slows down. Besides, the increase previously was relatively high. Therefore, most of the weighted stocks are not likely to rise significantly. Although the fundamental news is weak, the expectation to easing monetary policy should not be set to high. The market is still within the process of fluctuation.


The LME aluminum closed higher significantly by 2.62% at $ 1880 / ton on Monday. The increase of domestic aluminum is limited. Main contracts of Shanghai aluminum increased by 0.71% only. As Greek leftists swept to power, the speaker of German Ministry of Finance claims that the EU will re-discuss upon the Greek request about debt extension. However, Germany will not change its previous attitude about decreasing debt. The China (Shanghai) free trade zone non-ferrous metal spot trading platform has been permitted. The stable aluminum spot price is believed to drag the LME aluminum up. Investors are recommended to continue buying Shanghai aluminum.


Yesterday both domestic and international markets have big swings; LME amplitude was 5%, in early trading session the price dropped 3.3% and lately it rose up 1.7%. Copper price was supported when it was close to the recent low of $5353. Domestic copper market is active in trading and investing, which almost covered the loss on Monday. SHFE copper meets a short covering since it recovered from all that was lost around the recent low at RMB 39710. On Monday the copper market is quite strong, which is mainly impacted by the rumors that the store closed copper.
From fundamentals, LME spots premium increased $19 to $48.5; the inventory level increased 1700 tons to 237000 tons. Technically, copper price recovered from the low. However it would probably dump into the rebound again. In the short term it may try the resistance point at $5800, for domestic resistance point at RMB 42000.


Yesterday PP futures opened at a low price and followed with a downward trend. It opened at RMB 7300 and closed at RMB 8203. The trading volume increased 57344 lots to 535000 lots; the holdings increased 13244 lots to 359000 lots. In terms of upstream, propylene price remains flat. In terms of devices, the current capacity utilization is normal.
From spots perspective, today in domestic markets most prices are walking along the lower side. Downstream enterprise demand becomes light; most purchases are small amount; the trading and investing are light. For instance of wiredrawing price, yesterday the mainstream quotation in North China is RMB 770-8050 per ton; the mainstream quotation in East China is around RMB 8450-8700 per ton. The fundamentals seem weak. In short term, the price will remain fluctuated as the key trend; we suggests to trade around the interval of RMB 7000 to RMB 7500.
                                                                                   Dong LV (Investment Certificate NO. TZ008452)