The major driver of gold in the first quarter of 2009 was the ETF's demand, which remained subdued and we saw redemptions taking place from the largest gold ETF i. e., SPDR Gold Trust. After Akshaya Tritiya, the demand from the Indian gold market was seen waning and stability in financial market is likely to weigh on gold prices.

We recommend selling of gold on rallies; on Comex we feel it might not be able to breach the crucial resistance of $918/oz. The outlook for the fortnight is to sell gold on rallies with a downside target of $865/oz and Rs 14150/10gm.

Crude Oil: Falling demand and inventory buildup are the primary reasons responsible for the fall in energy prices all over the world. The swine flu epidemic which is threatening to become a pandemic, may lead to a decrease in air travel, which may impact the airline industry and the ATF consumption.

Natural gas was laggard and corrected sharply on heavy build up of inventories and mild weather.

Market News: The Energy Information Administration said the US crude stocks rose 4.1 million barrels, about double the market expectations, to the highest level since 1990. The rise in oil prices on April 27 was spurred by the Wall Street's climb, with traders also focusing on a hefty 4.7 million-barrel decline in the US gasoline stocks, ahead of the driving season. The data also showed that the US distillate stocks gained 1.8 million barrels. US Natural Gas reached its lowest level in more than 6 years on account of mild spring weather, high inventories and ongoing concerns about the slow economy. But the market could tighten soon on account of lower output and higher demand.

There has been a decline in the number of drilling rigs in the US from 1600 to 731; low prices also force more producer shut-ins leading to a lower output. PetroChina, the second largest company in China by market value, posted a profit that trails estimate for the first quarter. Its net income declined 35% to $2.8 bn from $4.32 bn.

Gulf oil producers said that they could tolerate moderate crude prices for longer to help revive global growth, but shared a concern with consumer nations that a prolonged period of low prices could sow the seeds of a future fuel price spike. According to OPEC secretary general Abdullah al-Badri, "World oil prices could recover to $60 per barrel by the end of the year if demand in the global economy picks up." The International Energy Agency (IEA), said that it can't rule out the possibility of an oil supply shortage in 2013-14 because of slower investments in oil exploration and production by OPEC and other oil producing countries. OPEC members have deferred investments in a total of 35 drilling projects.

Monthly Outlook: Crude oil prices have shown phenomenal strength and we expect prices may not go below $48 per barrel in the coming fortnight. On MCX, we don't expect it to trade below Rs 2450/barrel. We expect prices to strengthen as minutes released by the Federal Reserve indicated that the US recession might be easing, which is supportive for crude oil prices as any early indication of recovery in the US will support crude oil prices as US remains the top consumer of crude oil.

Despite bearish inventories, worsening economic outlook and plummeting demand, crude prices have not traded below $45 barrel. We believe the worst is almost over for crude oil and better times are round the corner.