Precious Metals are taking a breather today as US futures are seen trading significantly lower today ahead of the US opening. On CME, Gold futures $1665.80/oz, up 0.32% whereas Silver is trading at $17.093/oz, nearly a percent today whereas domestic prices have remained largely subdued due to a strong USIDNR. Gold price should continue to remain steady given the uncertainty surrounding the impact of the virus on the global economy and unless we see a synchronized response from the global central banks to tackle the weakness. On the downside, we continue to remain concerned about the sharp drop in global stocks markets which could trigger another round of de-risking due to margin calls and force liquidation in precious metals. On MCX, we see Rs.43500 acting as a key point for prices breaking which we expect significant declines in prices whereas on the upside, resistance is seen coming into force at Rs.44000. Silver has fared slightly better and may trade with a positive bias today.
Base Metals continue to remain weak as macro-data from China continue to reflect an economic slowdown amidst the contagion and global equities remain on shaky grounds. Chinese data showed a slowdown in the country’s manufacturing activity whereas monthly CPI remained low over the past month. Base Metals prices rallied marginally last evening on hopes of stimulus measures by various countries to cushion the economic damage from the virus. We maintain a bearish view on the basket as a whole and expect further decline in prices. Copper, trading at Rs.426.20 is expected to decline to Rs.422.0-Rs.420 today whereas Nickel may also decline to sub Rs.930 levels today.
Crude Oil remains trading in a broad range with high volatility as the oil war between Russia and Saudi Arabia progresses. After eroding over 30% of its value in a day, MCX Crude Oil is trading at Rs.2469.0, down 39.0 or 1.59% currently. While the situation within the OPEC is a developing event with no hopes of an agreement, the market is currently expecting the US shale producers to cut back on spending and drilling in a bid to keep the companies afloat and in turn support prices. With the IEA calling for over 1 mbpd drop in demand due to Coronavirus. On the downside, U.S. crude oil inventories rose in the most recent week, while gasoline and distillate stocks dropped, data from industry group the American Petroleum Institute showed on Tuesday. We are slightly bearish on oil prices today and may see it decline to Rs.2350-2300.0 whereas on the upside, resistance is seen at 2600.0 today.
AVP Commodities Research