Gold prices continue to trade near record highs with near month futures at $1891.55, up 0.08% whereas Silver is down over a percent to trade at $22.73 today. The safe haven demand for precious metals seems to have emerged as tensions between US-China escalate further. After the US demand for shutting down the Chinese embassy in Houston, China has retailed by asking the US to close down one of its embassies in Chengdu in a tit-for-tat move. Geopolitical tensions coupled with low interest rates and negative bond yields have further made the case for a bull run in Gold prices. Going ahead, the Federal Reserve meets in the coming week to determine whether more accommodation is necessary. Although currently there is a need more than ever to keep governments around the world spending; the additional money being printed might push investors to increase their investment power in gold. The short-term bias on precious metals in positive but technically, momentum indicators are pointing towards a negative divergence which may see prices correct marginally in the week ahead.
WTI Crude Oil is trading at $41.31, up 0.58% while Brent is up 0.55% to trade at $43.55 currently. Oil prices continue to consolidate as a stronger dollar and tensions between US-China continued to weigh on prices. As prices continue to reel under the pressure of slow global recovery, the situation was re-enforced as the number of Americans filing for unemployment benefits hit 1.416 million last week, unexpectedly rising for the first time in nearly four months, suggesting the U.S. economic recovery is stalling amid a resurgence in COVID-19 cases. The focus will be on the recovery package in the US which should aid the slow down in the US economy and in turn, push prices higher in the short term. MCX Crude is trading with a negative bias in intraday and may decline further if it breaks below support at 3060 whereas on the upside, resistance is seen at 3150-3180. Natural Gas prices are down nearly two percent but the overall direction remains inclined to the upside and buying may be considered above resistance at 135-136.
Base Metals are trading lower today with prices down over a percent on average across the board. LME Copper is down nearly two percent at $6397.0 whereas Nickel is at $13457.50, down 1.66% currently. Despite the recent triggers of supply concerns, we maintain a cautious view on Base Metals as whole. The increasing number of covid-19 cases worldwide pose a threat to the current price recovery and increasing tensions between US and China will be a major factor to halt the run-in base metals. Geopolitical tensions will likely see the trade war between both the countries re-emerge and eventually push prices significantly lower. Copper prices face strong support at 505 today a close below this level would likely see prices test 493 early next week whereas upsides are likely to remain limited to resistance at 513 today.
By Sam Nair