Written for Business Standard
January 1, 2012: Gold was the winner in the global market of widely traded commodities this year and is likely to be stronger than other commodities 2012.

The yellow metal was a winner hands down given its safe haven status and the heightened risk aversion of global market players. As the risk of a European debt crisis continues to loom over the global economy gold and the US dollar can turn into the investment of choice. Silver is used as a commodity, but is also treated as money competing with fiat currencies. This dual status of the white metal can help it rally in times of crisis and follow gold. Let us look at the individual commodities to see what they look like for the coming year.

Gold: The metal has fallen substantially during the second part of the year, but is the only commodity in our group that is strongly positive for the year. Gold had closed near the $1450 level on December 2010 and at the time of writing this article it was trading at the $1550 level. A panic in the market can send gold rallying once again. However for now the charts say that the precious metal can go all the way down to the $1450 to $1485 range before catching a bounce. 

In case gold falls below that level it has a few support levels to clear which include $1350, $1200 and $1100. At the current time the trading range for gold is between $1450 and $1950.

Silver: The white metal has a history of following gold  and being extremely volatile. Five percent moves a day are not unheard of. Hence, its prudent to be not aggressive when trading silver. For the year Silver posted a negative return. On December 31, 2010 silver closed at the $31.5 range and at the time of writing this article its price was $27.05. The correction in the price of silver was inevitable this year given its huge rally since early 2010 of about 230%. 

The white metal right now is near area of support of $26 and could catch a multi-month correction or even a reversal. In case, silver falls below $26, it can go all the way down to $21, which is a key level. When silver sold off in the 2008 crash it fell almost 58%. A similar percentage fall now can take it down to the $21 level. On the other hand a rally from the $26 level can take silver to $35 and a break out of that level can push prices up to $45

Crude: Crude oil is flat for the year having closed on December 31, 2010 at the $99 level and price around that level at the time of writing this article. We are tracking the sweet crude oil futures contract traded on the NYMEX. We are bearish about the future of crude as the demand for it peaked a few years ago in the US. The slack in demand was picked up by China and India, which are now witnessing a slowdown putting a downward pressure in prices.

Additionally, we have an explosion of supply in natural gas in the US, which can replace crude in the long run. Since markets discount the future, this will be a negative for crude prices. If there is spike in crude prices it could be a result or threat of war between US and Iran. We feel the trading range for crude is between $ 70 and $120, which gives a good playing field for traders.

Copper: Copper is down almost 30 percent for the year, which is an ominous signal for the equity markets. The equity markets often follow copper with a lag. Unlike copper, the S&P 500 index is flat for the year  rising the prospect of an equity market sell off in 2012 to catch up with the metal.

The copper futures contract which is trading at $3.35 at the time of writing this article is a little far from the support zone of $2.84. The support zone has been tested twice earlier and could break if prices come down again. A break of the zone can take copper all the way down to the $1.70 level. However a rally can take prices up to the $4 level, which would be a boost to equity markets.

Natural Gas: The prices of natural gas continue to fall in the US as new drilling techniques have created an over abundance of supply. We are bearish on the global prices natural gas unless a war with Iran pushes up prices of crude and natural gas rises in sympathy.  Given the import barriers in India, it's citizens can not take advantage of the falling prices of natural gas. Plus the depreciating rupee skews the picture for Indian buyers.