Precious Metals are trading sharply higher today with Gold futures at $1826.50, up 0.50% and Silver is pushing to its highest level in three years with futures trading at $20.823, up 3.13% currently. Precious Metals were boosted by the prospect of more stimulus packages from both the U.S. and Europe. While existing stimulus measures in the US were expiring at the end of July, the debate over a further round of economic stimulus measures is currently underway in the Congress whereas the European Union ministers finally reached agreement on a EUR750 billion ($857.979 billion) stimulus plan earlier in the day at the EU Summit. Gold prices also found support from the news that the Covid-19 vaccine from AstraZeneca and Oxford University showed positive response in clinical trials. Gold prices are already trading at its highest levels since 2011 and could be headed to $1850.0-$1900.0 in the near term. Technically, we continue to maintain a positive outlook on MCX Gold futures and expect it to test resistance at 49300 and further higher to 50000 if it breaks above this level. On the downside, strong support is expected at 49000. Silver prices will continue to outperform Gold prices in the short term and should test 57000-58000 before long liquidation forces prices back lower.
Oil futures are also rallying higher as vaccine hopes and fresh stimulus bring back buyers into the market. WTI Oil is trading higher by over two percent at $41.94/bbl whereas Brent Oil is at $44.40, up 2.61% currently. Oil prices drew support from positive news on vaccine development, stimulus measures in the US and EU and a broader reopening of economies despite the increasing number of Covid-19 cases. MCX Crude Oil is likely to trade with a positive bias in intraday and is expected to test resistance at 3170-3180 while support is seen at 3120. Natural Gas is trading with a neutral bias but remains inclined to the lower side.
Base Metals are extending gains for the second consecutive day with three-month LME futures trading at $6504.0, up 0.49% whereas Nickel is trading at $13387.50, up 1.50% currently. The sentiment in Base Metals continue to remain largely driven by the supply side concern rally in Copper but given the lack of clearer picture on the demand front, prices should eventually reverse to lower levels. While demand from China remains largely debatable, a worrying development is the build-up of inventories in China. SHFE copper inventories had climbed 59% to 158,647 tons in three weeks by Friday, their highest since May 22. However, LME copper stockpiles fell to their lowest since Jan. 17 at 157,350 tons. Despite the contradicting trend in inventories, a build-up in SHFE stocks could reflect a lack of demand and could be negative for prices in the short term. The intraday bias on Copper is positive and we expect prices to test 507-508 whereas Nickel may rally to 1015-1016.
By Sam Nair