BULLION - MCX Gold and Silver may note mixed trade in line with international market but bias remains on the downside. COMEX gold trades in a narrow range near $1315/oz after a 0.4% decline yesterday. Weighing on gold price is marginal gain in US dollar amid better than expected US economic data and no major cues from comments from Fed officials. US Q4 GDP growth slowed down from 3.4% to 2.6% but was slightly better than market expectations of 2.2% growth. Fed officials reaffirmed patient rate hike stance and end of bond reduction plan however there was no cues indicating further dovish tilt. ETF inflows also show weaker investor interest in gold. Gold holdings with SPDR ETF fell by 4.09 tonnes to 784.218 tonnes. Meanwhile, market players are eyeing geopolitical development and US-China trade talks. Tensions relating to US-North Korea rose as the two day summit ended abruptly. On other hand, no further escalation and reports of release of Indian air force pilot thawed concerns about India-Pakistan fight. On trade front, latest reports noted that US officials are preparing a final trade deal that President Donald Trump and his Chinese counterpart Xi Jinping could sign in weeks. However, comments from US officials also indicated that more work needs to be done and the administration won't accept a deal that doesn't include significant "structural" changes to Chinese economy. Gold has been on a downtrend after failing to break the $1350/oz level and amid no fresh positive triggers however we expect the price to stabilize near $1310/oz levels as global economic and trade uncertainty will keep a floor to price. For the day, one should wait for higher levels to create short positions.
ENERGY- Crude Oil- MCX Crude oil may note mixed trade in line with international market but overall bias is on the upside. NYMEX crude trades above $57 per barrel after a 0.5% gain yesterday. Crude trades higher supported by sharp decline in US crude oil stocks, better than expected US economic data and OPEC�s stance to continue with production cuts despite US displeasure with higher price. Saudi Arabia has also indicated that they may extend production cuts into second half of 2019. Meanwhile, reports indicated higher compliance by OPEC members last month. As per JBC Energy, OPEC output fell by more than a half-million barrels in February. However, weighing on crude oil price are concerns about health of Chinese economy amid disappointing economic data. The US and global equity markets are also under pressure amid increased geopolitical uncertainty and as market players eye development relating to US-China trade talks. Also weighing on crude price is record high US crude production and reports that Canada has further reduced production cuts for the month of March amid signs of easing glut. Crude has recovered all the losses noted earlier this week and has moved back to recent highs however we still do not expect that price will break past the $58 per barrel. Hence, we recommend one to wait for corrective dips to consider fresh longs. Further cues will come from US economic data, development relating to US-China and US weekly rig activity report.
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 weaker near $2.8/mmBtu after a 0.5% gain yesterday. US EIA weekly report noted a 166 Bcf decline in US natural gas stocks which is more than 5-year average decline of 104 Bcf but less than market expectations of 174 Bcf decline. Also weighing on gas price is higher US gas production and nearing end of winter season. However, supporting price is forecast of cold weather in US which will keep heating demand high in the near term. Natural gas is consolidating in a range amid mixed cues as market players assess current high demand against nearing end of winter season. Natural gas may witness mixed trade but selling could be considered at higher levels as demand is unlikely to sustain. Further cues will come from US weather forecasts and US weekly rig activity repot.
BASE METAL - Most Base metals on LME trade lower today after noting mixed movement yesterday. LME Zinc was the best performer with 1.2% gains followed by 0.7% rise in Zinc prices. In other metals both Copper and Nickel ended nearly unchanged while Aluminium closed 0.6% lower.
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