Daily Report 050315 2015-03-05

Main contract of domestic gold AU 1506 corrected slightly in the night session. The moving averages reveal a downward trend in the short term. Strong pressure was found along 5-day moving average at RMB 247. Previous short positions opened at RMB 254.5 could be held. Investors may open short-term short positions if the gold is weak during intraday trading, with stop-profit set at RMB 244 and stop-loss set at RMB 247.5. Sound investors should focus on the operational opportunities after the region between RMB 244 and RMB 250 is broken through. On the whole, the US dollar index rallies strongly after consolidation, which drags down the gold. The Fed's Beige Book indicates the economy is expanding moderately and the consumer expenditure is increasing as well. Although the employment data of ADP private sector in February is not as good as expected, it has been higher than 200,000 for the past 12 months. Overnight gold ETF positions stay flat at 760.80 tons after the significant decrease of 10.45 tons. The market risk-aversion sentiment is cooling down as the Greece and Ukraine’s political risk is fading away. Therefore, investors should be fully aware of the potential decreasing risk of gold.


Main contract of domestic silver AG 1506 dropped slightly in the night session. Continuous pressure was found along 60-day moving average at RMB 3600 in short term. A downward trend is expected to take place after the triangle convergence region is broken through. It is believed the silver may remain a downward trend afterwards. Previous short positions opened at RMB 3800 could be held. Defensive moves should be prepared at RMB 3700. However, if silver increasingly fluctuates during the intraday trading, investors could open small short positions, with the stop-loss setting at RMB 3630 and stop-profit setting at RMB 3500.

Stock Index

Recently, heavyweights, including banking stocks, securities stocks and real estate stocks, are relatively weak, dragging down the stock index gradually. According to the Xinhua News Agency, China’s GDP in 2015 is targeted around 7% while the CPI is targeted around 3%. In terms of the CPI target, there is still enough space for this year. The Premier claims at the National People's Congress and Chinese People's Political Consultative Conference that ‘we still have a number of measures of macro-control to be used in case we may face certain problems.’ This statement is considered as a guarantee that the government will release policies to improve economy when the economy is getting weaker and weaker. In terms of operations, pressure is found at 3585 basis points.


Overnight U.S soybean continues falling in weak situation, U.S soybean broke through $10 again, which is caused the demand goes to south America.In domestic market, overnight soybean meal dropped RMB 10-30 per ton, intraday would more likely continue falling;Soybean no.1 contract appears weak and fall continually.
Soybeans No. 1 contact is fluctuating below RMB 4300 per ton, in short term it still appears weak in performance. Domestic soybean still remains its trend before Chinese New Year. Currently the trading volume is in small amount; also current situation is hard to attract more merchants to join in the market. In terms of operation, long positions of soybean meal continue to stop profit; wait and see how soybeans No. 1 contract may perform.


Yesterday PP futures opened up low and followed by fluctuating. It opened at RMB 8460 and closed at RMB 8439. The trading volume increased 79404 lots to 664000 lots; the holdings increased 22224 lots to 259000 lots. For upstream, the Korean propylene price increased $45, the average price is $1040.5. In terms of spots, today among most domestic pp markets, the increasing scare is narrowed, partial markets are eased.
Like wire drawing, today's mainstream of north China bid in RMB 8450-8750 per ton, east China mainstream quotation in RMB 8550-8850 per ton, south China mainstream quotation in RMB 8850-8950 per ton. From the quotation, moving average appears bullish, but the MACD red pillars shorten, we suggest in short term there might be a callback.
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