Metals extend gains; oil prices trend higher despite increase in inventories
Commodity Online | July 09 2020
UPDATED 16:57:54 IST

Metals and Energy decline ahead of key payrolls data

Metals extend gains as markets focus on unemployment situation; oil prices decline

PADDY BASMATI Nov 2020 futures trading contract, trading started from today Aug 06, 2020) in ICEX commodity exchange

Precious Metals rally to record highs; oil prices push higher ahead of inventories

Revisiting Our Silver and Gold Predictions

Precious Metals are trading at multi-year highs with Gold futures at $1822.70, up 0.11% whereas Silver is trading at $19.37/oz, up over a percent since morning. Bullions extended its advance into a sixth day as the resurgence of the coronavirus in some parts of the world adds to concerns about a protracted global downturn. Demand for havens has surged, with inflows into gold-backed exchange-traded funds this year already topping the record full-year total set more than 10 years ago. Despite governments and central banks unleashing vast amounts of stimulus to support economic growth the increasing cases indicates that further easing may be necessary to fuel economic growth. All this bodes well for precious metals, especially Gold prices and we suspect that Gold should be headed for $1900 shortly and possibly even topple $2000 in the next few months. The intraday bias is slightly inclined to the negative side as prices have been struggling to break above resistance at 49300 and we may see it decline to 49120 and possibly 49000 today. Silver has finally broken above its massive trading range and is trading at its highest level in almost 7 years and the intraday bias is slightly negative.

 

Base Metals are trading higher today with most of the metals gaining an average of 0.8% since open. LME 3-month Copper futures are trading above its 2020 peak at $6344.75, up 1.75% whereas Nickel is at $13500.0, up 0.15% currently. Copper raced to its highest levels since January on Wednesday as speculators piled into the market, betting on further disruptions in top producer Chile and firm demand from the biggest consumer China. Copper on the London Metal Exchange has surged more than 40% since touching a 45-month low in March, driven recently by fears that the COVID-19 pandemic will curb mine production in Chile. Despite the strong rally, the loss of supply has not been material and this may force prices to correct lower eventually in the short term. Copper prices continue to remain bullish and may test resistance at 492 this week before entering into a corrective phase assuming that fundamentals lend some support. In intraday, 485 is seen as a support breaking which prices may decline to 483-480 today. Nickel prices continue to remain strong – support is seen at 1015, 1010 whereas resistance is expected to come into play at 1020. We continue to remain bullish on prices in the short term.

 

WTI Crude Oil is trading at $40.77, down 0.29% whereas Brent Oil is trading at $43.36, up 0.16% with the widening spread reflecting the case of increasing supply worries in the US. Natural Gas is higher by over half a percent to trade at $1.83 today. EIA confirmed a large increase in commercial oil storage yesterday with the increase reported at 5.7 mln bbls for the week ending July 3 despite which prices rallied sharply towards the close of the evening session. Oil prices continue to get whipsawed as contradictory signals continue to keep traders on the sidelines. While global growth and demand continue to disappoint, weaker gasoline consumption in the US and below-capacity oil refineries continue to pressure prices to the lower side. We are neutral on oil prices in intraday and expect it to trade in the range of 3050-3070 today. Natural Gas are seen testing support at 137.0 breaking which further declines to 135-133 may be seen in the evening session.

 

Sam Nair



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