BULLION � MCX Gold and Silver may trade with a positive bias tracking cues from international exchange. COMEX gold trades higher above $1310/oz after testing the highest level since May 2018. Gold has hit multi month high amid choppiness in US dollar and equity market. The US dollar index is under pressure ahead of FOMC decision today. Fed is expected to keep monetary policy unchanged but may reiterate patient stance on rate hikes. Global risk sentiment is weak amid signs of slowdown in Chinese economy, disappointing economic data and corporate earnings results from US and uncertainty about Brexit and US-China trade talks. US and China will begin their two day meeting today to resolve trade issues however hopes of a deal are low given tensions over Huawei and other issues like technology transfer. On Brexit front, UK lawmakers voted to renegotiate the Brexit withdrawal agreement with European Union however Brussels is not willing to negotiate. ETF inflows also show buying interest in gold. Gold holdings with SPDR ETF rose by 8.23 tonnes to 823.868 tonnes, highest level since June 2018. Gold may witness choppy trade ahead of key events however general bias may be on the upside amid weaker outlook for US dollar and general weaker risk appetite.
ENERGY- Crude Oil- MCX Crude may note mixed trade in line with international market but selling could be seen at higher levels. NYMEX crude trades in a narrow range above $53 per barrel after a sharp 2.5% gain yesterday. Crude rose yesterday after a sharp 3.2% decline a day earlier. The mixed trade is due to mixed factors and uncertainty ahead of outcome of major events. Supporting crude price are supply concerns relating to Venezuela as US imposed sanctions on Venezuela's state-owned oil co. PDVSA that effectively block the country exporting crude to the US. Crude has also benefitted from reports that Saudi Arabia will further reduce output in February to 10.1 million barrels per day as against targeted 10.311 million bpd. However, weighing on crude price are concerns about record high US crude oil production, slowdown in Chinese economy, disappointing US economic data and uncertainty about US-China trade talks and Brexit. US and China will begin their two day meeting today to resolve trade issues however hopes of a deal are low given tensions over Huawei and other issues like technology transfer. On Brexit front, UK lawmakers voted to renegotiate the Brexit withdrawal agreement with European Union however Brussels is unlikely to negotiate. Focus today will shift to US weekly inventory report. Ahead of EIA report, API noted a smaller than expected about 1 million barrel increase in US crude oil stocks and another rise in gasoline and distillate stocks. US EIA weekly report is expected to note a 3.1 million barrels increase in US crude oil stocks. Apart from crude stocks, focus will be on US crude production which stands near record high level. Apart from inventory, focus will also be on US economic data which will affect outlook for the economy.
Natural Gas- MCX Natural gas may note mixed trade in line with international market however bias may be on the downside. NYMEX natural gas trades mixed near $2.9/mmBtu after a 1% gain yesterday. Weighing on natural gas price are weather forecasts which show that current cold weather in US Midwest and east will give way to milder weather keeping a check on heating demand. However, supporting price is expectations of a bigger than average decline in gas stocks. As per early estimates, EIA may note a 190 Bcf decline in gas stocks as against 5-year average decline of 150 Bcf. A bigger than average decline in stocks will widen deficit over 5-year average. Natural gas has fallen sharply in last few days on expectations of waning demand however we expect choppy trade ahead of inventory report hence one must wait for higher levels to create short positions.
BASE METAL - Base metals on LME trade sideways to higher today following mixed close yesterday. LME Nickel was the best performer with 2.5% gains followed by 1.3% rise in Aluminium prices and 0.8% gains in Copper prices. In other metals however Lead and Zinc prices ended 0.1% and 0.9% lower respectively.
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