In the first fortnight this year, gold has demonstrated surprising resilience. Prices have rebounded from the low $1200s of the year-end. Will the trend continue or is it a temporary blip in an otherwise falling market?

With global economic growth showing signs of revival under lead of the US, will investors turn more positive towards base metals?

China is the mover and shaker of the global commodity market. If China sneezes, the market catches cold.

Fortunately, the risks of hard-landing by the Asian giant have faded and expectations of a downturn this year have been lowered. These are questions engaging market participants.

The markets turned firmer last week. Prices of all metals were up. Among precious metals, platinum moved higher by 1.5 per cent and its premium over gold rose to its highest since July 2011 on fears of industrial action in South African mining sector.

It was closely followed by palladium with 1.4 per cent gain.

Silver prices moved up by 1.1 per cent, while gold edged up 0.5 per cent over the week.

Base metals enjoyed a strong week with nickel, the outperformer, rising 6.1 percent on the LME in the wake of Indonesian ore export ban.

It was followed by lead (4.1 per cent) and aluminium (3.4 per cent).

Tin, zinc and copper, too, edged up.

Commodities market awaits steady flow of positive macro data and further announcement about the pace of tapering in the months ahead.

These will impact commodity prices. The dollar is expected to strengthen, pressuring commodity prices down, while positive growth data would signal pickup in demand.

TEMPORARY SUPPORT The weaker-than-expected US non-farm payrolls data alongside a softer dollar provided a boost to gold prices last week.

Prices are likely to find temporary support from short-covering activity and buying ahead of the Lunar New Year in China.

However, buying is expected to ease thereafter, pressuring prices down.

The emerging markets demand is sluggish.

Physical buying interest in India is rather limited with extant restrictions on gold imports unlikely to be lifted anytime soon.

Investor interest is fickle and the boost to prices last week is likely to be a temporary one. Global liquidity is set to shrink with gradual tapering.

All these will combine to push gold prices lower towards $1,000 an ounce during the year.

Whether the benefit of fall in dollar price of gold will be available to Indian consumers will depend on the exchange rate.

There is expectation the rupee may turn vulnerable with tapering taking effect. Given the size of the speculative shorts on Comex, short-covering price rallies cannot be ruled out.

However, these will at best be short-term and experts recommend selling into rallies as the best way to trade gold in early 2014.

The premium of platinum over gold remains at about $180 an ounce. There is scope for the spread to widen. Major South African producers are yet to reach a wage agreement even though some negotiations commenced in July last year, remarked an expert.

In London gold PM Fix on Friday, gold closed at $1250/oz. Silver edged up to Friday AM Fix of $20.01/oz. Platinum rose to a high of $1,447/oz and palladium $747/oz.

Technically, gold is overbought. Resistance is seen at $1,270 and then $1,260, while support may be available at $1,230 and $1,220. Gold’s relief rally may target $1,270.

Indonesian effect Last week, LME cash copper closed at $7373 a tonne, while aluminium was $1780/t. In order to add value domestically and capture market opportunities, the Indonesian government has banned export of ore, the immediate effect of which has been felt on nickel prices that spurted on LME last week. How long and how effectively the ban will continue is unclear.

The International Copper Study Group has lowered by 18 per cent (1.1 million tonnes) growth in copper mine supply over the next three years. This is said to be one of the largest downward revisions ever.

Technically, copper’s momentum is bullish. Resistance is seen at $7470 and $7380, while support is seen at $7,250 and $7,200.

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