Gold prices in the US markets slipped from the three-month high mark they were nearing on account of robust US economic data reports which indicated that the home economy was strengthening. The data also paved way for speculations that the Federal Reserve might hike interest rates which, in turn, would make the dollar stronger. The US reports on wholesale inventories showed that a lower than expected number of Americans were looking for benefits for the unemployed, resulting in a consolidation of dollar and firmer US bond yields. Spot gold in the US market was down by 0.6%.
Investors are now looking forward for cues when Federal Reserve Chair Janet Yellen appears before the US senators and members of Congress and responds to queries on the health of the domestic economy. Earlier, gold prices were on a upward trend, leading to a rise of nearly 10% since December last year. The prices gained on the back of protectionist policies of US President Donald Trump which tightened the precious metal’s reputation as a safe-haven asset. Trump’s policies on sanctioning a travel ban on the entry of people from Iraq, Iran, Syria and four other nations from entering the US coupled with his remarks that a weaker dollar would benefit the domestic manufacturing sector added to investor worries. Furthermore, looming political upheaval in Europe due to the forthcoming election in France, Germany and Italy led to strengthening the position of gold.
Among the base metals, the prices of platinum, which is also used in making of jewelry, soared to its highest mark since first week of October last year.
Crude oil prices continued their rise on reports that there has been an unexpected dip in US gasoline inventories. Experts argued that the rise in gasoline inventories in the country in the past few days could seriously undermine efforts by a host of nations that have come together under a deal to cut oil output in order to give a boost to oil prices. Under the accord between Organization of the Petroleum Exporting Countries and non-OPEC nations such as Russia, oil output would be cut by almost 1.8 million barrels per day to 32.5 million till June this year to bring down global oil supply by 2%. The decline of US gasoline inventories pointed to higher demand in the world’s biggest oil market.
The benchmark Brent crude was up 60 cents a barrel even as US Energy Information Administration (EIA) data showed that gasoline inventories fell by 869,000 barrels last week to 256.2 million barrels. Traders and investors had hoped a 1.1 million- barrel gain. Meanwhile, despite continued protests by a Native American tribe, drilling beneath a North Dakota lake resumed after the US government cleared way for the project via signing of an executive order.
We saw some sort of profit booking in bullions in yesterday’s session. We now change the outlook to negative as we saw prices have broken its uptrend line support drawn on hourly charts. Immediate support for gold lies near 28,800 levels while Silver prices have broken down its rising trend line support of 42,200 indicating bearishness to prices. We expect prices could drift lower towards 41,500 levels. Negative bias would stand void if it breaches 42,500 levels.
Crude oil prices remained silent in yesterday’s session however we did saw some short positions unwinding due to decrees in open interest. Outlook remains positive for crude oil for upside target of 3,600 levels. Natural gas prices initially moved higher but prices drifted lower following Natural gas inventories. There has been no change in outlook as on daily charts prices are trading above the rising trend line support of 202. We expect dips to be considered as buying opportunity for upside target of 217/220 levels..
Base Metals View
Base metals initially moved higher but failed to sustain at higher levels and drifted lower in second half. We now change the outlook to negative as yesterday’s move was quite negative for prices. We saw major breakdown on hourly charts. Rallies can now be considered as selling opportunity.