By Sam Nair
Precious Metals trend higher, further upside seen
Precious Metals are extending gains from last evening with Gold at 1329.70, up 2.50 or 0.20% whereas Silver is up 16.65, up 0.14% currently.
Gold rallied over 15 points from its low of 1314.60 after the Labor Department reported that Inflation in February, as first indicated by average hourly earnings in last week's employment report, proved subdued as confirmed by the core rate of today's consumer price report which managed only a modest monthly gain whereas the yearly rate edged back slightly.
The rally in precious metals came as the report reduced the chances of more than three rate hikes from the FED this year. The focus today will be on the retail sales report for February indicating the strength of consumer spending. We maintain a positive intraday view on Precious Metals.
Base Metals rally sharply; short-term outlook positive
Base Metals are trading steady today with Copper at 6990.75, up 0.55% whereas Aluminum and Lead are higher by 0.37% and 0.21% respectively.
Nickel and Zinc are trading marginally in red currently. The strength in base metals comes after China's economic data for February surprised to the upside. Industrial Production grew 7.2% in February, beating expectations of 6.3% and January's 6.2%.
Urban fixed asset investments expanded 7.9% in February, compared with a consensus of 7% and previous reading of 7.2%. Retail sales rose 9.7% last month missing the consensus of 10%, it came in better than January's growth of 9.4%. The intraday bias is slightly neutral-bearish on base metals.
Crude Oil trades; inventories and US production in focus
Crude Oil continues to consolidate in a broad range as traders look ahead to the weekly inventories report with the EIA forecasting a build of about 2 mln barrels in oil inventories along with a draw in both gasoline and distillate stocks.
While falling oil or byproducts stocks could be positive for prices, the key factor will be the weekly US production which has been increasing at a rapid pace and threatening to undo output cut efforts from the OPEC and other countries.
Natural Gas continues to struggle and the lack of upside momentum raises concerns over the integrity of the current upside. WTI futures are trading at 60.72, up 0.02% whereas Natural Gas is down 0.575 to trade at 2.77 currently. We maintain a neutral outlook on prices today.
(Sam Nair is the Head of Commodities at Stewart & Mackertich WML)