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Commodities Outlook: Metals to trade with a mixed bias, Crude Oil trends higher
Commodity Online | January 11 2018
UPDATED 17:58:20 IST

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Retail inflation falloff to 17-month in Nov at 2.33%

By Sam Nair
Precious Metals trade steady ahead of unemployment data

Precious Metals are trading steady ahead of the macroeconomic releases scheduled today evening with Gold trading at 29330, up 6 points whereas Silver is trading at 38968, down 26 points or 0.07% currently.

The focus will be on the unemployment claims report which is expected to come in at 245,000 in the January 6 week vs 250,000 earlier and the producer prices for December which are expected to come in weaker at 0.2% compared to 0.4% in November.

While stronger claims could be positive for prices, weaker than expected producer prices could lower the expectations for the inflation report scheduled tomorrow. The weakness in the dollar index and global equities has also been supportive for bullions this week.

The technical outlook continues to remain positive but we remain wary of corrective moves given the recent upside. On the way higher, resistance comes into play at 29400 whereas support is seen at 29250 and then further lower at 29100 today. Silver finds strong resistance at 39300 whereas support is seen at 38750 today.

Crude Oil rallies further despite weaker inventories report

Crude Oil rallied further higher fueled by over optimism and tensions in the Middle East. Crude Oil is trading at 4067, up 31 points or 0.77% whereas Natural Gas is up 0.76% to trade at 186.80 currently.

The EIA released its official balance of commercial crude oil inventories last evening reporting a lower than expected draw in crude oil inventories along with a massive build in gasoline and distillate stocks. Despite the strong build in byproducts, the market failed to decline reflecting a strong bullish sentiment in the market.

The optimism is being driven by tensions in Iran along with the faster than forecasted depletion of supply in the physical markets. The strength in global equities has also played a crucial role in supporting the upside in prices.

Natural Gas is also trading with a positive bias and the focus will be on the weekly storage report which forecasts a draw of 318 bcf compared to 206 bcf.

Technically, we maintain a very bullish-neutral outlook on prices and expect prices to trend higher this week – resistance is seen at 4100-4125 whereas on the downside, support comes into play at 4000 this week.

Base Metals trade in a range; further downside seen

Base Metals are trading within a range and with the exception of Nickel, all the metals are trading marginally in green today. Copper is trading at 457.75, up 0.65 whereas Nickel is trading at 815.20, down 3.80 or 0.46%.

The bias on base metals continues to remain negative but the lack of momentum is cause for concern this week. The focus will be on the Chinese customs report which should show the levels of imports of metals in the month of December.

The levels of imports have picked up over the last two quarters suggesting that growth and demand may be on the rise again finally. The supply crunch which is expected to be deeper than first forecast coupled with the strong imports from China has been the key diver for base metals in the short term.

The technical outlook remains negative on base metals and we expect prices to decline further before the uptrend resumes in the medium term.  Copper finds intraday support at 457 breaking which further downside is expected to 454-453 whereas on the upside, resistance is seen at 460-462 in the short term.

(Sam Nair is the Head of Commodities Research at Celebrus Commodities Limited)

Commodity Arrivals Rate
Mustard Oil NR 9550.00
Coconut Oil 2 18000.00
Arecanut 3.5 2000.00
Sugar NR 3700.00

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