Gold prices ended moderately lower after geopolitical tensions between the US and Mexico over the construction of a wall along their shared border subsided following a telephonic conversation between the US and the Mexican presidents. Although there is a difference of opinion on the erection of border wall and who will foot the bill, the issue will now be resolved through a comprehensive review. US President Donald Trump also met UK PM May and endorsed his support for NATO, much to the liking of the British. Last week, the prices of the yellow metal remained largely unchanged in the US following disappointing US fourth quarter growth figures, indicating that a faster rate of interest rate hike in 2017 may not take place.
Traders and market watchers kept a close watch on he US Bureau of Economic Analysis data. According to it, the gross domestic product grew 1.9% in Q4 2016, a letdown after figures showed that the growth rate till September was 3.5%. In another development, the Census Bureau said the US durable goods orders decreased by 0.4% in December, while they were expected to increase by 2.6%. According to government data, the economy grew 1.6% in 2016 which was the slowest rate of growth since 2011. This slowdown has fueled speculation that the Federal Reserve will not avoid increasing the interest rates.
Asian markets reacted sharply to Trump’s comments over barring people from Muslim-majority countries from entering the US and gold prices witnessed a hike. However, the markets in China, South Korea, Hong Kong and Singapore were shut on account of the Lunar New Year.
Among the base metals, copper prices gained 2.86%, while the prices of platinum were up 0.69% following increased demand globally.
Crude oil prices continued their decline even after reports that major oil producers were abiding by their pledge to cut oil output. Since mid-2016, the oil production in the US has risen by more than 6%.
According to a pact between Organization of the Petroleum Exporting Countries and non-OPEC nations implemented from January 1 this year, oil producers agreed to cut output by almost 1.8 million barrels per day to 32.5 million for the next six months. The deal aims to reduce global oil supply by 2%.
Experts said that crude oil prices were under pressure due to increased drilling in the US, a move which could act against the objectives of the pact. Official data showed that US drillers added 15 oil rigs in the week, bringing the total count to 566.
|Crude oil||3736||3672||3632||3568||3528||Side ways|
As expected, bullions gave a gap down opening however, it has failed to sustain at lower levels and moved higher in second half of the trading session. We saw gold prices have taken support near 28,080 which was multiple support level and spiked higher giving close near its day’s high. We saw RSI inching higher towards 60 levels. Similarly silver prices have moved almost Rs.1,200 from its low of 40,470 levels. on hourly charts, RSI has moved above 60 mark adding bullishness to the prices. We now expect bullions to remain strong and can head higher towards 28,500 and 41,900 levels in gold and silver respectively.
Crude oil prices gave a gap up opening made a high of 3696 but it has failed to sustain at higher levels and drifted lower. RSI is hovering near 40 levels leaving us with no clear view on prices. We expect close below 3600 could drift prices lower towards 3,560. Natural gas, as expected inched higher towards 230 levels. Outlook remains bullish with no change in bias. We saw on Friday prices made a series of bullish candlestick on hourly charts along with the momentum indicator, RSI which has moved above 60 levels. we expect natural gas prices to move higher towards 235 levels.
Base Metals View
We saw some sort of profit booking in base metals in first half of the session while as the day progressed; prices inched higher where copper had closed at its day high. Aluminium, lead and nickel remained silent. Zinc had remained volatile in Friday’s session. We continue to hold the same view. However for aluminum and copper outlook has changed to positive.