BULLION - MCX Gold and Silver may note some decline tracking cues from international exchange however buy on dips is recommended. Domestic gold price will also be affected by rupee movement and any announcement in Annual Budget. The discount in domestic market and narrow spread indicates that market players are expecting government to announce a duty cut from current 10% level. We however do not expect that duty cut will happen at the interim budget. If there is no announcement, we may see some narrowing in the spread between international and domestic price. COMEX gold trades marginally lower near $1325/oz after a 0.7% gain yesterday when it tested the highest level since April 2018. The rally in gold came to a halt amid weakness in commodities and some stability in US dollar after recent sell-off. Commodities came under pressure amid disappointing Chinese economic data and no major breakthrough in US China trade talks. Both sides stated progress at end of two day talks but no specific measures were announced. Talks will continue later this month as Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer head to China in mid-February.
ENERGY- Crude Oil- MCX Crude may note some decline tracking cues from international exchange but downside is limited. NYMEX crude trades weaker near $53 per barrel after a 0.8% decline yesterday. Crude oil rose as high as $55.37/bbl in intraday trade yesterday, the highest level since 21 November, 2018, however failure to sustain above that level resulted in a correction. Crude's rally came to a halt amid mixed US economic data, concerns about Chinese economy and no major breakthrough in US-China trade talks. At end of two day talks, US-China cited substantial progress but no specifics were announced and US delegation is now expected to visit Beijing around mid-February. China announced its plans to buy substantially more American agricultural and energy goods while US President Trump said he is optimistic a deal could be reached. Also weighing on crude price is record high US crude production and Canada's plan to reduce production cuts from Alberta region. However, supporting crude price are supply concerns relating to Venezuela and OPEC's stance to continue with production cuts. As per Reuters estimate, OPEC's production fell by 890,000 barrels per day to 30.98 million bpd in January. The 11 members with supply reduction targets have reduced production by 569,000 bpd as against pledged reductions of 812,000 bpd, which equates to 70% compliance.
Natural Gas- MCX Natural gas may note mixed trade in line with international market but general bias may be on the downside. NYMEX natural gas trades marginally higher near $2.8/mmBtu after a 1.4% decline yesterday. Weighing on gas price are mixed weather forecast which will keep a check on heating demand. US EIA weekly report noted a 173 Bcf decline in US natural gas stocks as against market expectations of 194 Bcf decline. This is however higher than 5-year average decline of 150 Bcf and has widened the deficit over 5-year average stocks to 13%. Natural gas has fallen sharply in last few days and could take support near $2.8/mmBtu level hence one we suggest one to wait for higher levels to create fresh shorts.
BASE METAL - Base metals on LME trade with a weaker bias today paring yesterday�s gains. LME Zinc was the best performer with 1.2% gains followed by 1.05% rise in Lead and Nickel prices. In other metals, Copper ended 0.5% higher while Aluminium as nearly unchanged.
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