Metals trade lower on profit booking; oil prices extend gains ahead of inventories
Commodity Online | July 01 2020
UPDATED 17:51:14 IST

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Precious Metals are trading marginally lower today after a strong opening which saw Gold futures push above $1800.0/oz for the first time in six years. Gold futures are trading lower by one-third of a percent at $1794.85/oz and Silver futures are at $18.552/oz, down half a percent currently. The sharp rally in bullions came last evening after the US Federal Reserve Chairman Powell said that output and employment remain far below their pre-pandemic levels and cautioned that the outlook for the economy is "extraordinarily uncertain.” This coupled with the increasing number of covid-19 cases across the US heightened risks of further slowdown in the US economy and correction in the stocks markets which usually boosts precious metals prices. The trade spat between US and China which seems to be worsening added fuel to the Gold rally. Technically, we expect downsides to be limited to $1790.0 and expect buying to re-emerge and push prices to $1820+ levels in the near future whereas a breakdown would possibly push prices significantly lower and see further consolidation in the previous ranges. Silver futures are also likely to test support at $18.38 today and should eventually recover following Gold’s movement.


Oil prices have recovered sharply after the API reported a surprise draw in US inventories last week with WTI futures rallying to a high $40.58/bbl and is trading at $40.09/bbl, up two percent while Brent Oil, traded on ICX is at $42.08, up 1.96% currently. Natural Gas has corrected after the sharp gains seen last evening with near month futures trading at $1.710/mmbtu, down 2.34% as the time of writing this. The American Petroleum Institute (API) reported that US crude inventories declined by 8.15 million barrels for the week-ended June 26. The market expects a decrease of 0.71 million barrels ahead of the official EIA report at 8.00 pm today. Crude Oil prices also drew support from a stronger than expected Chinese Manufacturing PMI report. Crude Oil prices continue to oscillate back and forth in the range of $36.0-$41.0 as traders continue to monitor the covid-19 threats closely. We maintain a slightly bearish view in intraday and expect further downsides if it breaks below $39.85 whereas on the upside, a break above resistance at $40.25 should see prices rally further higher. NG prices have a sharp corrective mode and we expect it to test $1.65 and possibly lower in intraday today.


Base Metals are trading with a negative bias today with Nickel down over a percent at $12670.0/ton followed by Zinc at $2021.50/ton, down 0.79%. LME Copper futures are trading at $6022.25/ton, down 0.27% currently. Base Metals as a whole are trading with a negative bias and may decline further in the evening session. MCX Copper is testing support at 462.50 and a breakdown will see prices push to 460.0-458.0 today and further lower in the short term. Nickel prices are also trading with a negative bias and a breakdown below support at 968 would push prices lower to 965-960 in intraday. The rest of the metals are also trading with a sharp negative bias and may decline further in intraday.


Sam Nair