BULLION - MCX Gold and silver may witness choppy trade in line with international market but bias may be on the downside. COMEX gold trades in a narrow range near $1330/oz after 0.2% decline yesterday. Gold has corrected from recent highs but has turned range bound awaiting more clarity on US China trade issue, Brexit and Fed�s monetary policy. US President has decided to extend the March 1 deadline to impose higher tariffs on Chinese imports and also plans to meet Chinese President to finalize the deal. However, President Trump also said Monday an agreement "might not happen at all� and this fuelled some nervousness in the market. On Brexit front, UK Prime Minister has delayed a final vote to March 12 while there are report that Theresa May is considering a plan to delay Brexit. Fed has maintained patient rate hike stance but recent FOMC minutes showed that the central bank is not that dovish. Further clarity will come from Fed Chairman Jerome Powell�s testimony. ETF outflows show weakening confidence in gold�s price gains. Gold holdings with SPDR ETF fell by 1.1 tonnes to 788.331 tonnes. Gold may witness range bound movement unless we get more clarity on US China trade issue and Feds monetary policy stance however bias may be on the downside as risk sentiment has improved while ETF outflow continue.
ENERGY- Crude Oil- MCX Crude may witness choppy trade in line with international market but buying could emerge at lower levels. NYMEX crude trades weaker near $55 per barrel after a sharp 3.1% decline yesterday. Crude oil came under pressure post US President�s comments on higher price. US President Donald Trump tweeted that prices are too high and called on OPEC to �relax and take it easy.� President Trump last year had expressed concerns about higher crude price which were near 4-year high and this caused OPEC to consider a production hike. Market reacted sharply to Trump�s comments yesterday amid concerns that OPEC may come under pressure and stop production cuts however OPEC is unlikely to bide under pressure as price are still not that high. Also weighing on crude oil are reports of restart of crude production at Saudi Arabia�s 1 million barrel per day Safaniyah oilfield. Equity markets also turned choppy after initial enthusiasm over US-China trade progress. Also weighing on crude price is expectations of another increase in US crude oil stocks. However, supporting price is OPEC�s production cuts and supply issues relating to Venezuela and Iran. Easing worries about US-China trade dispute is also supportive for commodities at large. Crude rallied over 25% since start of the year without any significant correction. The sell-off was long overdue and President Trump�s comments were just the trigger. We believe that market overreacted to President Trump�s comments and we could see some stability in coming sessions. Focus today will be on US economic data and any comments from OPEC post Trump�s statement.
Natural Gas- MCX Natural gas may note some gains tracking cues from international exchange. NYMEX natural gas trades mixed near $2.8/mmBtu after a sharp 4% rally in previous session. Supporting gas price is forecast of cold weather in US which will increase heating demand. Also supporting price is supply outage in Texas and expectations of another bigger than average decline in gas stocks. However, weighing on price is nearing end of high demand winter season and higher US gas production. Natural gas lately plunged to 1 year low and we are now seeing some recovery. While cold weather in US has lent support to price, the gains are partly also due to short covering ahead of contract expiration. Natural gas has broken the $2.8/mmBtu level and could see some extended gains.
BASE METAL - Base metals on LME trade sideways to lower today after noting a volatile session yesterday. LME Lead was the best performer with 0.6% gains followed by nearly unchanged Copper prices. In other metals, Aluminium Nickel and Zinc closed 0.4%, 0.1% and 0.2% lower respectively.
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