Gold prices slipped marginally ahead of a Federal Reserve policy meeting, while keeping an eye on political developments in the UK. A key focus for markets this week is the Federal Reserve’s two-day policy meeting that ends on Wednesday. Investors will be watching out if the Fed raises interest rates, or takes steps for tightening in the months to come and next year. Market players will also pay close attention to details of the Fed’s plan to reduce its $4.5 trillion balance sheet later this year.
The median Fed policymaker forecast is for two more rate increases by year-end, after already raising its benchmark interest rate once this year, by a quarter percentage point in March. But a recent run of disappointing US economic data combined with growing uncertainty about the Trump administration’s ability to pass tax and healthcare reforms sparked doubts over the Fed’s ability to raise rates as much as it would like before the end of the year. Meanwhile, in the UK, the new British cabinet is set to have its first meeting later on Monday after Prime Minister Theresa May was reelected with a minority government late last week
Among base metals, nickel futures traded higher on MCX as speculators built up fresh positions on the back of improved demand from alloy-makers and other consuming industries in the spot market.
Crude oil prices gained after posting some losses overnight as investors returned to the market to seek cheap valuations in wake of recent losses. An increase in US drilling returned to haunt investors after energy services company Baker Hughes said that US drillers last week added rigs for the 21st week in a row, the longest such streak on record, implying that further gains in domestic production are ahead. The US rig count rose by 8 to 741, extending a year-long drilling recovery to the highest level since April 2015.
The increase in US drilling activity and shale production has mostly offset efforts by OPEC and other producers to cut output in a move to prop up the market. So far, the production-cut agreement has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya and Nigeria, besides relentless increase in US shale oil output.
In agriculture news, cardamom futures traded higher on MCX as investors build up fresh bets amid a rise in physical demand for cardamom in the domestic spot market. Further, insufficient supplies on restricted physical arrivals from the major cardamom producing regions too fuelled the uptrend. Turmeric futures traded up on NCDEX as participants built up fresh positions, triggered by uptick in domestic as well as export demand in the spot market. Besides, restricted supplies from producing regions also added support to turmeric prices’ uptrend.
MCX Commodity Pivot Table
Prices moved lower in previous trade giving a fall below their support level. Outlook continues to remain bearish as prices had given close below their support levels. However, pullback cannot be ruled out as the momentum indicator, RSI has gone into oversold zone and hence pullback can be used as selling opportunity. For Silver, 38,850 stands immediate support while 28,900 – 28,850 could act as a support zone for Gold prices.
Crude oil prices moved higher in previous session however it has taken resistance near downward sloping trend line at 3015. Outlook remains bearish as long as 3015 is capped on higher side above which bias would change to positive for an upside target of 3,080 levels. Natural gas prices remained volatile in previous trade. Bias remains positive as long as 191 is protected on downside.
Base Metals View
Metal prices had given negative close in yesterday’s trading session. However, we saw sort of short covering in Copper, Lead and Aluminium prices. We now expect rallies can be considered as selling opportunity.