BULLION - MCX Gold and Silver may witness choppy trade in line with international market but bias may be on the upside. COMEX gold trades higher near $1320/oz and has tested the highest level since May 2018. Gold has gained support from weakness in US dollar post FOMC decision. The US dollar index trades little changed near 95.3 levels after 0.5% decline yesterday. The US dollar weakened as Fed changed its official stance from gradual rate hikes to patience on future rate hikes. Fed�s stance has fuelled market expectations that there may be no rate hike this year. In last few days, there have been reports that Fed may end its bond reducing program thereby increasing US dollar supply in market. Fed indicated no change to its bond plan however it showed willingness to be flexible has fuelled expectations that Fed�s next move could be ending bond reduction. Gold is also supported by mixed US and Chinese economic data and uncertainty about US-China trade talks. US-China will hold second day talks today but there is little hope of a major breakthrough. ETF inflows also show buying interest in gold. Gold holdings with SPDR ETF were unchanged at 828.868 tonnes, highest since June 2018. Gold may witness choppy trade as market players assess Fed�s stance and position for other events like US China trade talks and US non-farm payrolls however bias may be on the upside given weaker outlook for US dollar.
ENERGY- Crude Oil- MCX Crude may note some gains tracking cues from international exchange. NYMEX crude trades higher above $54 per barrel after yesterday�s 1.7% gain. Supporting crude price is EIA weekly report which noted a 0.919 million barrel increase in US crude oil stocks as against expectations of 3.1 mn bbl rise. EIA also noted an unexpected 2.235 mn bbl decline in gasoline stocks after sharp rise in last few weeks. US crude production was however steady at record high level of 11.9 million barrels per day. Also supporting crude price are supply concerns relating to Venezuela post US announcement of sanctions on Venezuela's state-owned oil co. PDVSA. Sanctions could reduce Venezuelan exports by about 500,000 bpd however it is likely that they will find other buyers in Asia. Crude has also benefited from Saudi and Russia�s support for production cuts. Russia Energy Minister Alexander Novak said Russia reduced oil output gradually in line with its pledge to the cartel and will try to increase the pace of reduction next month. Crude also gained support for weakness in US dollar post Fed�s announcement to be patient on rate hikes. Crude has managed to gains despite mixed US and Chinese economic data and uncertainty about US-China trade talks. China�s manufacturing PMI improved from a month earlier but held 50 levels indicating contraction in manufacturing activity. US ADP report showed a bigger than expected rise in jobs but pending home sales fell.
Natural Gas- MCX Natural gas may note mixed trade in line with international market however sell on rise is suggested. NYMEX natural gas trades marginally higher near $2.88/mmBtu after a 1.7% decline yesterday. Supporting gas price is expectations of a bigger than average decline in gas stocks which will widen the deficit over 5-year average stocks. EIA weekly report due today is expected to note a 194 Bcf decline in gas stocks as against 5-year average decline of 150 Bcf. However, weighing on price are weather forecasts which show that current cold weather in US Midwest and East may not continue for long keeping a check on heating demand. Natural gas may remain range-bound ahead of inventory report however overall bias may remain weak due to subdued demand expectations
BASE METAL - Base metals on LME trade sideways to higher today extending yesterday�s gains. LME Nickel was the best performer with 1.9% gains followed by 1.4% rise in Copper prices and 1.1% gains in Zinc prices. In other metals Aluminium and Lead prices ended 0.9% and 0.7% higher respectively.
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