Commodity Insight Thursday, February 25, 2016

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1 REK-228 Market Insight GOLD DROPS FROM 3-MONTH HIGH ON PROFIT TAKING Gold rises on safe-haven demand, fund purchases Gold reversed early losses on Thursday as volatility in stock markets stoked safehaven demand, with bullion funds seeing fresh buying from investors. Asian shares got off to a shaky start as investors remained cautious in the face of a fragile recovery in crude oil. Safe-haven assets, including the Japanese yen, gained across the board. Gold's 16-percent rally this year has been fuelled by safe-haven bids as global equities tumbled on lower oil prices and fears of an economic slowdown. The metal hit a oneyear top of $1, two weeks ago. An increase in assets of bullion-backed exchange traded funds (ETF) has also supported the rally. Inflows into SPDR Gold Trust, the top gold ETF, since the beginning of the year have already surpassed outflows for the whole of The increase in assets so far is also the highest since On Wednesday, holdings of the fund rose further to tonnes, the highest since March WTI Crude drops in Asia with U.S. shale producers in focus Crude oil prices fell in Asia on Thursday as marginal U.S. shale oil producers are in sharper focus for production or operations cuts. Overnight, crude futures ticked up on a volatile, choppy day of trading, as U.S. crude inventories rose less sharply than anticipated after a report from the American Petroleum Institute hours earlier raised expectations for a massive supply build. On Wednesday morning, the U.S. Energy Information Administration (EIA) said in its Weekly Petroleum Status Report that U.S. commercial crude inventories for the week ending on February 19 rose by 3.5 million barrels from the previous week. Meanwhile, crude production in the lower 48 states fell sharply by 196,000 barrels per day on the week representing the fifth straight week of declines. Overall, U.S. output dipped by 33,000 to million bpd, also moving lower for the fifth consecutive weekly period. U.S. production continues remains far below its June level of 9.5 million bpd when it soared to its highest level in at least 40 years. GBP/USD falls to seven-year low, as IMF warns of risks related to Brexit GBP/USD fell to fresh seven-year lows on Wednesday, extending a massive threeday rout, as top lawmakers continued to debate the merits of a historic referendum that could enable the UK to leave the European Union in June. Since UK prime minister David Cameron reached an agreement with European Commission leaders on Friday that granted Britain special status in the European bloc, the pound has plummeted more than 3% against the dollar. The pound encountered further downward pressure on Wednesday after a Bloomberg survey determined that sterling could drop as low as 1.35 versus the greenback within a week of Britain's departure, a level last seen in , before closing at CENTRAL BANKS RATES S y m b o l Interest Rate A U D 2.00% CN Y 4.35% CA D 0.50% EU R 0.05% GBP 0.50% CHF -0.75% USD <0.50% JP Y 0.10% Source: Forex Factory, InvestCap Commodities Research MAJOR CURRENCIES/INDICIES Symbol Rate TREND EUR/USD BEARISH GBP/USD BEARISH USD/JPY BEARISH Dollar Index NEUTRAL S&P500 1,936 BULLISH DJ30 16,520 BULLISH FTSE100 6,004 BULLISH Source: Metatrader, InvestCap Commodities Research Page 1 of 6

2 OPEN 1, , HIGH 1, , LOW 1, , CLOSE 1, , CRUDE GOLD 20 EMA 1, EMA 1, EMA 1, EMA 1, RSI (14 Days) ADX (14 Days) RANGE Gold price approached from our first main waited target at after it succeeded to confirm breaching the symmetrical triangle that appears on image, showing some temporary bearish bias affected by stochastic negativity that gathers the positive momentum gradually on the four hours time frame, while the EMA50 continues to support the price from below. Therefore, these factors encourage us to keep our bullish overview on the intraday and short term basis, reminding you that breaching level will push the price towards direct, while the positive scenario will remain valid unless breaking level and holding below it. OPEN HIGH LOW CLOSE EMA EMA EMA EMA RSI (14 Days) ADX (14 Days) RANGE Crude oil price showed positive trading yesterday evening after approaching from level, to fluctuate around the moving average 50 that forms good intraday resistance, noticing that stochastic loses its positive momentum by reaching the overbought areas, which forms negative factor that we are waiting to motivate the price to drop and resume the negative trading. Therefore, our bearish trend expectations will remain valid and active on the intraday and short term basis conditioned by holding below Page 2 of 6

3 OPEN HIGH LOW CLOSE SILVER 20 EMA EMA EMA EMA RSI (14 Days) ADX (14 Days) RANGE Silver price showed strong positive trading yesterday but it returned to settle around the EMA50 again, to keep trading stuck between the trend confirmation levels represented by support and resistance, to continue with our neutrality in order to monitor the price behavior according to these levels, waiting to breach one of them to detect the next destination clearly. We remind you that breaching level will push the price to visit the recently recorded top at as a first main target. EURUSD O PEN HIGH LO W CLO SE EM A EM A EM A EM A RSI (14 Days ADX (14 Days) R ANGE The EURUSD pair couldn t settle below level after the attempt to break it yesterday, to fluctuate above this level now, noticing that stochastic loses its positive momentum gradually to reach the thresholds of the overbought levels, which represents negative factor that we wait to push the price to resume the bearish bias, to keep our bearish trend expectations on the intraday and short term basis. The EMA50 keeps supporting the suggested bearish wave, and our next target located at , taking into consideration that repetition of the price failure to break level followed by the bullish channel s support that appears in the image will lead the price to bounce higher positively. Page 3 of 6

4 USDJPY A Daily Publication of InvestCap Research GBPUSD OPEN HIGH LOW CLOSE EMA EMA EMA EMA RSI (14 Days) ADX (14 Days) RANGE The GBPUSD pair managed to approach from our first target that we mentioned at , showing some bullish bias that is affected by stochastic positivity and that might push the price to retest barrier and extend to before it returns to resume the main bearish trend. Therefore, we keep preferring the bearish trend on the intraday and short term basis if the price settled below level, supported by the negative pressure that comes from the EMA50, pointing that breaking level will open the way towards heading to directly. MAR K ET SU MMAR Y 24-Fe b Fe b-16 O PEN HIGH LO W CLO SE MOVIN G AVERAGE 20 EM A EM A EM A EM A R SI (14 Day ADX (14 Days) R ANGE The USDJPY pair tested barrier yesterday and bounce higher from there, where stochastic provides positive signals on the daily time frame, which requires being aware from the upcoming trading, especially if the price managed to break the mentioned level, where this factor will push the price to short- term recovery attempts after the beginning of forming ascending bottom levels. In general, the bearish trend will remain valid as long as the price below level and the EMA50 continues to provide support for the suggested bearish wave, and its main targets at and extend to Page 4 of 6

5 COTTON OPEN HIGH LOW CLOSE EMA EMA EMA EMA RSI (14 Days) ADX (14 Day RANGE Cotton price plummeted yesterday to achieved the targets at mentioned in our previous reports. It may show some sideways fluctuations as the price is heavily oversold. After yesterday's move and resistance levels will restrict price from rising. The current wave is capable to travelling to Therefore the trend is bearish until it shows strong stability above region. ECONOMIC CALENDAR T ime Currency Impact Actual Forecast Previous 5:00am USD M FOMC Member Bullard Speaks 5:30am A U D H Private Capital Expenditure q/q -3.10% -9.20% 2:00pm EUR M M3 Money Supply y/y 4.70% 4.70% 2:30pm GBP H Second Estimate GDP q/q 0.50% 0.50% GBP M Prelim Business Investment q/q 0.60% 2.20% 3:00pm EUR M Final CPI y/y 0.40% 0.40% 6:30pm USD H Core Durable Goods Orders m/m 0.20% -1.00% USD H Unemployment Claims 271K 262K USD M Durable Goods Orders m/m 3.00% -5.00% Source: Forex Factory, InvestCap Research Page 5 of 6

6 DAILY TRADING STRATEGY GOLD BULLISH TRADE 1 BUY: TARGET: Ext: 1260 STOPLOSS 1,218 SILVER NEUTRAL TRADE 1 BUY: TARGET: STOPLOSS CRUDE OIL (FEB) NEUTRAL TRADE 1 SELL: TARGET: STOPLOSS TRADE 2 BUY-STOP: TARGET: STOPLOSS (GOLD) EUR-USD BEARISH TRADE 1 SELL: TARGET: STOPLOSS (GOLD) GBP-USD BEARISH TRADE 1 SELL: TARGET: STOPLOSS (GOLD) USD-JPY BEARISH TRADE 1 SELL: TARGET: STOPLOSS ICOTTON BEARISH TRADE 1 SELL: TARGET: STOPLOSS Disclaimer This report has been prepared by Invest Capital Markets Limited (ICML) and is provided for information purposes only. Under no circumstances is to be used or considered as an offer to sell or solicitation of any offer to buy. While all reasonable care has been taken to ensure that the information contained therein is not untrue or misleading at the time of publication, we make no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time Invest Capital Markets Limited and any of its officers or directors may, to the extent permitted by law, have a position, or otherwise be interested in any transaction, in any securities directly or indirectly subject of this report. This report is provided solely for the information of professional advisers who are expected to make their own investment decisions without undue reliance on this report and the company accepts no responsibility whatsoever for any direct or indirect consequential loss arising from any use of this report or its contents. In particular, the report takes no accounts of the investment objectives, financial situation and particular need of individuals, who should seek further advice before making any investment. This report may not be reproduced, distributed or published by any recipient for any purpose. The views expressed in this document are those of the Economic Research Department and do not necessarily reflect those of ICML or its directors. Mohsin Hassan mohsin.hassan@investcapital.com (Ext 4809) All rights reserved by Invest Capital Markets Limited. This report or any portion hereof may not be reproduced, distributed or published by any person for any purpose whatsoever. Nor can it be sent to a third party without prior consent of Invest Capital Markets Limited. Action could be taken for unauthorized reproduction, distribution or publication. Page 6 of 6