By Sam Nair
Precious Metals are trading slightly higher ahead of macroeconomic data
Precious Metals have recovered slightly from yesterday ahead of key data release from the US. Gold is trading at 28990, up 103 points or 0.36% whereas Silver is up 0.29% to trade at 37773 currently.
Precious Metals are expected to weaken further in the evening session as the market looks ahead of the nonfarm payrolls and productivity reports from the US. The ADP report is expected to come in lower with consensus at 186,000 compared to 235,000 in the previous month whereas productivity is expected to be revised higher to 3.2% in November. The focus will be on the payrolls report which should likely have a positive impact on precious metals today if it misses estimates. The slow progress on the tax bill and the geopolitical situation could keep prices support in intraday even the upside remains largely limited.
Gold finds strong support at 28950 and then further lower at 28870 whereas, on the upside, resistance is seen at 29100. Silver finds a major support at 37200 breaking which further downside is expected to 36200 in the next few trading sessions. On the upside, resistance is at 38000 today.
Base Metals open on a mixed note, likely to weaken further
Base Metals have opened with a mixed note after the sharp downside seen last evening. Copper and Lead are trading higher at 426.90 and 161.60 respectively. The rest of the metals are trading marginally in red currently.
The sharp crash seen in base metals came in as the yearend profit booking saw traders close out long positions driven by an uptick in LME inventories along with weaker macroeconomic data from China. The mixed PMI data from China also put metals under further selling pressure as China consumes almost 40% of the world’s copper and metals produce to fuel its economy. The short-term bias still remains weak and we expect prices to resume the downtrend after a short profit booking move on the upside.
Crude Oil trends lower after API reports a build in refined products
Crude Oil is trading lower today despite the API showing a large draw in crude oil stocks which was countered by a build in both gasoline and distillate stocks. Crude Oil is down 51 points or 1.37% to trade at 3672 while Natural Gas is gaining nearly two percent to trade at 191.20.
The API reported earlier today that crude oil inventories held in the US may have declined 1.562 mln for the week ending November 3 whereas gasoline and distillates may have increased 0.52 mln and 3.13 mln respectively. The EIA report is also forecasting a large drop in oil stocks whereas a build is seen in refined products. We expect prices to drop sharply if the build in products meets expectations along with an increase in production levels after last week increase in rig counts.
Technically, 3660 is expected to be a strong support in intraday breaking which 3600-3560 is expected this week whereas, on the upside, 3730 continues to remain as a strong resistance today.
(Sam Nair is the Head of Commodities Research at Celebrus Commodities Limited)