BULLION - MCX Gold and Silver may note mixed trade in line with international market but bias may be on the downside. COMEX gold trades in a narrow range near $1310/oz after a 0.5% decline yesterday. Gold is rangebound as support from concerns about US-China trade talks, US government shutdown threat, Brexit uncertainty and global economic slowdown is countered by persisting strength in US dollar and ETF outflows. The US and China officials will hold trade talks this week but market expectations are low that a deal will be reached ahead of March 1 deadline. As per reports, the Trump administration said the US president still wants to meet China's Xi Jinping in an effort to end the trade war. The US faces a Feb.15 deadline to reach a deal to avert another government shutdown. Reports noted that US congressional negotiators late Monday have reached a deal in principle on border security to avoid another federal government shutdown. Global economic concerns are high amid disappointing Chinese and European economic data and downbeat growth forecasts. The US dollar index rose 0.4% yesterday marking its eight consecutive gains. The US dollar has benefited from safe haven buying amid uncertainty about US-China trade deal, concerns about health of European economies and dovish shift in monetary policy stance of major central banks. Amid other factors, gold has gained support from signs of central bank buying. As per reports, People's Bank of China increased gold holdings for the second month in January after a two-year hiatus.
ENERGY- Crude Oil- MCX Crude may note some gains tracking cues from international exchange but sell on rise is suggested. NYMEX crude trades marginally higher but in a narrow range above $52 per barrel after a 0.6% decline yesterday. Crude fell as low as low as $51.23/bbl in intraday day trade yesterday but managed to recover and end above $52/bbl. Crude has fallen in last few days after failing to sustain above $55/bbl level however we are yet to see a close below $52/bbl. Mixed factors has resulted in choppy trade in crude oil and this trend could continue in the near term. Crude along with other commodities saw some support from reports that US congressional negotiators have reached a deal in principle on border security to avoid another federal government shutdown. Crude is also supported by OPEC�s adherence to production and supply concerns relating to Venezuela. However, weighing on price is concerns about OPEC-Russia cooperation going ahead, record high US crude production, rise in US crude oil rig count, expectations of another increase in US crude oil stocks, firmness in US dollar and concerns about US-China trade talks. The US and China officials will hold trade talks this week but market expectations are low that a deal will be reached ahead of March 1 deadline. Crude may witness choppy trade amid mixed factors and positioning ahead of inventory report but sell on rise is suggested as global concerns and higher US supply will weigh on price.
Natural Gas- MCX Natural gas may note some gains tracking cues from international exchange but upside is limited.
NYMEX natural gas trades higher near $2.65/mmBtu after a 2.3% gain yesterday. Natural gas slumped to Feb.2018 lows last week and is seeing some recovery amid forecast of cold weather in US which will increase heating demand. Natural gas has also gained support from narrow gap between coal and gas price which has increased demand from power sector. Also supporting price is drop in US rig count. However, weighing on price are expectations of subdued demand going ahead as winter nears an end. Subdued demand expectations and higher US production has also eased tightness concerns to some extent. Natural gas has fallen sharply in last few days and we are seeing some relief rally however it could be short-lived. One should wait for higher level to create short positions. Focus will continue to be on US weather and trend in other energy prices.
BASE METAL - Base metals on LME trade mix today after a weaker close yesterday. LME Zinc was the worst performer with 2.2% drop followed by 1.7% decline in Lead prices and 1% slide in Copper prices. In other metals Nickel too ended 0.6% lower while Aluminium was down by modest 0.05%.
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