BULLION- MCX Gold and Silver may note choppy trade in line with the international market but the overall bias is on the upside. COMEX gold trades mixed near $1290/oz after a 0.3% gain yesterday. Gold has turned choppy after testing $1300/oz level for the first time since June 2018. The rally in gold price came to a halt amid improved risk sentiment. Progress over US-China trade talks, upbeat US labour data, Feds patient stance on interest rate hikes and Chinas move to cut reserve requirement rate helped global equity market stabilize. Commerce Secretary Wilbur Ross said there's a "very good chance" the US gets a reasonable deal with China. ETF outflows also show some profit taking in gold. Gold holdings with SPDR ETF fell by 1.47 tonnes to 796.78 tonnes. However, supporting price is the weaker outlook for US dollar amid Feds cautious tone on US economy and patient stance on interest rate hikes. Atlanta Fed President Raphael Bostic said the US central bank should only raise interest rates once this year but keep going with its plan to gradually shrink the balance sheet. While risk sentiment has improved, global uncertainty persists amid a slowdown in the Chinese economy, US government shutdown and Brexit uncertainty. Gold may witness mixed trade as market players await fresh cues. However, we maintain buy on dips view as US dollar is likely to remain choppy while risk sentiment may not improve significantly. COMEX Silver trades weaker near $15.7/oz amid rangebound movement in gold and weakness in industrial metals. Gold has turned choppy amid lack of fresh cues. Industrial metals are pressurized by concerns about the Chinese economy. ETF outflows also show weaker investor interest. Silver holdings with iShares ETF fell by 72.98 tonnes to 9790.1 tonnes, lowest since June 2018. The spot gold-silver ratio rose from 81.9 to 82.4 as silver ended lower yesterday.
BASE METAL - Basemetal on LME trade sideways to lower today after ending on a higher note yesterday. LME Zinc was the top performer with 2.5% gains following a 0.7% rise in Aluminum prices and 0.4% gains in Nickel prices. In other metals, Copper and Lead too ended modestly higher. The metals pack trades sideways to lower in early trades today after two days of gains amid caution ahead of US-China trade talks outcome. Markets are in a wait and watch mode as they await the outcome of US-China trade talks. The Trump administration has expressed optimism it can reach a reasonable trade deal with China as President Xi Jinping dispatched one of his top aides to negotiations in Beijing. Also putting pressure on the prices is demand worries especially from top consumer China along with and a mixed trend in the global equity market.
ENERGY -Crude Oil- MCX Crude may note choppy trade in line with international prices but overall bias may be on the upside. NYMEX crude trades mixed near $48.5/bbl after a 1.2% gain yesterday. Crude hit a session high of $49.79/bbl yesterday but retreated to end the day at $48.52/bbl. Crude has rallied more than 15% from recent lows amid lower output from OPEC and recovery in the US equity market. OPECs production fell last month while OPEC and allies have promised adherence to the 1.2 million barrels per day cut deal which will run from January to June. US and global equity market recovered amid upbeat US labour data, Chinas move to cut reserve requirement and progress over US-China trade talks. Also supporting crude is decline in US crude oil rig count which indicates weakening production interest. Early forecasts indicate that US weekly report may note a 1.1 million barrels decline in US crude oil stocks. While crude has recovered sharply from recent lows, the rally will be challenged by higher US output and demand concerns amid uncertainty about US and Chinese economy. US crude production is at record high level and is expected to rise further. Concerns about US economy are high amid mixed economic data, continuing government shutdown and impact on corporate earnings from trade war and higher interest rates. Chinese economic data continues to show a slowdown in the economy. Crude may witness choppy trade amid lack of fresh cues but general improvement in risk sentiment and lower OPEC supply will
support price.Natural Gas- MCX Natural gas may note mixed trade in line with the international market but sell on rising is suggested. NYMEX natural gas trades marginally higher near $2.96/mmBtu after a 3.3% decline yesterday. Lack of fresh cues has resulted in some short covering in natural gas. However, weighing on price is a forecast of mild weather in US which will keep a check on heating demand. Also weighing on price is expectations of another smaller than average decline in gas stocks which will further ease tightness concerns. Natural gas may witness choppy trade amid lack of fresh cues but slack demand expectations may keep the pressure on price. The focus will be on US weather and trend in energy prices.
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