Precious Metals are having a steady session this morning with Gold futures trading at Rs.51465, up 0.29% whereas Silver is at Rs.68187, up 0.38% currently. Bullions have consolidated into a broad range ever since the volatile sell-off from record highs we saw in early August. While the fundamentals continue to remain firmly in place for higher prices, strong equities and rising yields have seen buyers stay away from the market. The markets are likely to remain focused on the FOMC meeting this Wednesday which should provide further cues ahead for the US economy and the bank’s monetary policy. We believe that from a technical perspective, gold and silver prices may have approached a bottom at the moment and could be setting stage for a short-term rally in the near future. MCX Gold faces strong resistance at Rs.52000 above which we expect the metal to test Rs.54000 and possibly higher over the next couple of weeks. Silver also sees a strong resistance emerge at round Rs.69500-Rs.70000 breaking which we expect the metal to test Rs.73000-Rs.74000 in the short term.
Crude Oil has pared opening gains and is down 0.26% to trade at Rs.2736.0 currently whereas Natural Gas is up nearly five percent to trade at Rs.176 currently. The overall fundamentals continue to point towards excess supply both from the US and OPEC+ members along with tepid demand due to the ever-increasing number of Covid-19 cases globally. The end of the peak driving season in the US and restarting output from Libya should pressure prices further with the only solace being the second hurricane in the Gulf of Mexico which has reportedly shut down offshore production. The Organization of the Petroleum Exporting Countries (OPEC) and allies, a grouping known as OPEC+, meets on Sept. 17 to discuss compliance with deep cuts in production, although analysts don't expect further reductions to be made. Technically, we maintain a bearish bias on oil prices and expect it to test support at Rs.2600-Rs.2550 once intermediate support at Rs.2680 is broken whereas on the higher side, Rs.2800 is seen as a strong resistance for prices. Natural Gas, on the other hand is expected to perform after prices rebounded from key support at Rs.168 and we expect it to test Rs.185-Rs.190 this week.
Base Metals continue to remain confined to a broad range despite China’s impressive demand over the past couple of months as global recovery continues to haunt the future of industrial metals. Copper is higher by half a percent at Rs.526.80 whereas Nickel is trading at Rs.1115.30, up 0.34% currently. With no new developments on the metals front, the market seems to taking cues from the technical traders. Copper continues to settle into broad range of Rs.510-Rs.530 whereas Nickel is seen rebounding from lows and previous supports in the range of Rs.1080-Rs.1090. We continue to remain bullish on Nickel and expect prices to retest resistance at Rs.11150 and possibly Rs.1180 in this contract and would advise buying on dips.
By Sam Nair