Precious and Base Metals trade steady; focus on macro-economic data
Commodity Online | June 25 2020
UPDATED 17:38:05 IST

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Precious Metals are having a steady session today with Gold futures at $1771.65, down 0.20% and Silver futures at $17.61, down 0.31% currently. Gold prices are retracing from highs today after touching their highest level in more than seven years at $1,779 yesterday as investors started liquidate long position following the strength in dollar and US equities. The focus today will be on the weekly jobless claims data continue to paint a very dull picture for the US labour market which is a very important metric for the Federal Reserve and the FED monetary decisions are highly dependent on the unemployment situation. We expect unemployment claims to increase further which could provide a strong boost to Gold prices in the later session. Durables Goods orders and Q1 GDP is also due to at 6.00 pm which should remain largely in line with expectations today. Despite the weaker numbers and strong markets, the threat of the fragile US-China situation and a corrective move in equities could see a sharp reversal in Gold prices.

 

Technically, we may see Gold prices decline further in intraday and in the short term – short selling is expected emerge below support at 47800.0 and could take prices to 47500.0-47000.0 over the next few days. For Silver, support is seen at 47500.0 and resistance at 47800.0 today.

 

WTI futures have declined sharply since last evening and are trading at $37.47, down 1.42% while Brent is down by about a percent at $39.95 currently. Crude Oil fell over five percent last evening, falling below $40 as higher oil inventories and fears of resurgent coronavirus weighed on prices. US crude stocks rose 1.4 million barrels to a record high, the Energy Information Administration said on Wednesday. We are negative on oil prices in the short term as the threat of increasing cases globally continue to weigh on demand for crude oil along with a build-up in inventories. The situation is likely to be further aggravated the fact that OPEC+ may decide to return previous production quotas when they meet in early July. We expect oil prices on MCX to test 2770.0-2700.0 over the next few days.

 

Natural Gas is down four percent since open and the focus will on the storage report at 8.00 pm with a market expectation of 105 bcf compared to 86 bcf in the previous week. We expect gas prices to remain under pressure and test 115.0-110.0 in the near term.

 

Base Metals are trading mixed today with Lead gaining nearly 1.50% and Nickel down nearly half a percent since morning. Copper futures are trading at $5894.25, up 0.11% currently. Copper prices have been consolidating over the past few days and price action reflects strong indecision in the market due to the ongoing volatility. Copper inventories in warehouses tracked by the Shanghai Futures Exchange (SHFE) has fallen for the sixth straight week to their lowest in more than 17 months, while LME on-warrant copper stocks fell to their lowest since Feb. 24 at 116,800 tonnes. While falling inventories have kept prices steady, worries over increasing cases of coronavirus have also increased fears of another fall in global demand. Copper prices are trading in a range of 447-451 with an increasingly bearish bias in the short term. The rest of the base metals are expected to remain volatile and decline further this week.

 

Sam Nair



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