BULLION - Gold has started to move in a narrow range ahead of the two day FOMC meeting which starts today, it is expected to offer hints on the central bank plan on interest rates. The FOMC may not lower interest rates this week; but might pave the way with a change in language in their statement for a rate decrease in future. Traders have been quick to sidestep and put last weeks Middle East escalation in the rear, as a significant military escalation remains unlikely. Amidst the central bank policies, investors also look forward to the G20 summit later this month where US and Chinas leaders are expected to meet and solve the trade spat going on from so long. Holdings of SPDR Gold Trust, the worlds largest gold backed exchange-traded fund, rose 0.6% to 764.10 tonnes on Friday from 759.70 tonnes on Thursday.
ENERGY-Oil prices held steady in morning session on account of rising tensions in Middle East. Tensions between the United States and Iran flared on Monday as Tehran said it would soon breach a key element of the 2015 international pact limiting its nuclear program, while President Trump ordered another 1,000 troops to the Middle East and vowed again that Iran would not be allowed to develop a nuclear weapon. On demand side, New York Federal Reserve reported its gauge of business growth posted a record fall this month to its weakest level in more than 2-1/2 years, suggesting an abrupt contraction in regional activity. Prices slipped further into a bear market as American factories and homebuilders offered latest signs of weakening demand. Elsewhere, Iran production has dropped to its lowest level since the 1980s as full force of US sanctions weighed on exports which gave some support to prices. On contrary, the U.S. energy department reported that shale oil output is expected to reach a record in July. Looking ahead, oil market will remain volatile for next few weeks, ahead of G-20 summit and OPEC meeting.
BASE METAL - Base metals gained some strength in previous session after a brief consolidation, with copper prices surging higher supported by development that a key mine in Chile halved output due to a strike, while investors waited for news from the U.S. Fed interest rate meeting. Chuquicamata copper mine, one of the world's largest, had maintained output at 50% of capacity as it faced its fourth full day of a union strike. China's refined copper output fell by 5.2% YoY and 3.9% MoM to 711,000 tonnes in May. On other hand China's iron ore futures fell for a second straight session on Tuesday as concerns mounted over waning demand at mills in wake of heightened production restrictions in the top steelmaking city of Tangshan. Base metals complex is likely to trade mixed with a positive bias specially zinc, nickel and copper.
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