News and Analysis
* G20 stayed away from free trade policy in the meeting.
* Euro zone recorded a trade deficit for the first time in three years in Jan’17.
* LME Copper stocks fell by 1.4 percent on Friday.
European stocks are trading lower as G20 ministers set aside a pledge to avoid protectionism, solely on US’ insistence. Asian markets ended mixed and the US stock futures are trading lower.
Gold prices are trading higher by 0.34 percent at $1232.61 per ounce while MCX gold prices are trading flat at Rs.28536 per 10 gms. Gold prices hit a two-week high on Monday as the dollar slumped to near 6-week lows after the U.S. Federal Reserve's dovish outlook on the pace of rate increases this year continued to disappoint dollar bulls. Gold prices have rebounded more than $35 from its low hit before the policy decision to boost rates last Wednesday, while the dollar has fallen 1.7 percent from its high of 101.71 hit the same day.
LME Copper prices are trading lower by 0.6 percent at $5905 per tonne as the G20 nations dropped tougher language from last year that vowed to “resist all forms of protectionism”, as the US refused to budge. Steven Mnuchin, US Secretary of Treasury, signalled that US policy would follow the campaign promises made by President Donald Trump to put “America first” and review trade agreements to seek better deals for Washington. However, persistent supply disruption concerns in Chile, Peru and Indonesia provided a cushion to prices. Also, decline in LME stocks acted as a supportive factor. MCX copper prices are trading lower by 0.9 percent at Rs.387.3 per kg.
Crude oil prices are trading lower by 1.5 percent at $48.08 per barrel while MCX oil prices are trading lower by 1.66 percent at Rs.3195 per barrel. Oil prices fell on Monday, with already-bloated markets pressured by rising U.S. drilling activity and steady supplies from OPEC countries despite touted production cuts.
We expect gold prices to trade higher today, as FED pointed to gradual rate hike in 2017 while weak dollar index and bargain hunting after a recent fall would also be supportive factor for the yellow metal.
Oil prices are trading negative today as increase in drilling activity in the US, high inventories and doubt over compliance by the OPEC members on output cut are pressure points in oil markets.
Copper prices are likely to trend lower as G20 leaders failed to agree on a commitment towards free global trade, giving way to protectionism concerns. Also, falling net longs in CFTC Copper contracts is acting as a negative factor.
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