Published on 17/03/2017 11:06:09 AM | Source: Sushil Finance

We expect gold prices to trade sideways - Sushil Finance

Posted in Commodities Reports | #Commodity Tips #Sushil Finance


Gold

Gold rallied for the second straight session on Thursday, climbing to its highest level in over a week after the U.S. central bank signaled only gradual rate tightening and the dollar slid to its lowest in five weeks.

The Federal Reserve on Wednesday raised U.S. interest rates for the second time in three months, as expected, but did not flag any plan to accelerate the pace of monetary tightening as some investors had anticipated.

Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

Dutch center-right Prime Minister Mark Rutte fought off the challenge of anti-Islam and anti-EU rival Geert Wilders to score an election victory that was hailed across Europe on Thursday by governments facing a rising wave of nationalism.

 

Outlook

We expect gold prices to trade sideways on the back of short covering after sharp drop in prices.

 

Silver

Silver rose 0.05 percent to $17.31 per ounce, after hitting its highest in a week at $17.56.

 

Outlook

We expect silver prices to trade sideways on the back of short covering after sharp drop in prices.

 

Crude Oil

Oil prices slipped on Thursday, as support from a weaker dollar was offset by U.S. crude inventories near record high levels that again raised concerns whether OPEC-led output cuts were starting to drain a global glut.

The Organization of the Petroleum Exporting Countries and some non-OPEC producers cut production from Jan. 1 to reduce record stocks of crude. But an oil price rally after the deal has been hobbled by data showing persistently rising U.S. stockpiles.

Latest data from market intelligence firm Genscape showed a build of more than 2 million barrels in the week to March 14 at the Cushing, Oklahoma delivery point for U.S. crude futures, traders said. Data on Wednesday showing a modest slide in crude stockpiles in the United States, the world's biggest oil consumer, had helped lift oil prices after a week-long rout spurred by record U.S. inventories pushed them to three-month lows.

The U.S. Energy Information Administration said on Wednesday that crude inventories fell last week, the first decline after nine weeks of increases, but only by a dip of 237,000 barrels from a record high. It also reported Cushing stocks jumped 2.1 million barrels in the week to March 10.

 

Outlook

We expect crude oil prices to trade positive on the back of surprise drawdown in U.S. crude inventories.

 

Natural Gas

U.S. natural gas futures fell on Thursday to their lowest in a week on forecasts for warmer weather through the end of March and a slightly smaller-than-expected weekly storage draw.

The U.S. Energy Information Administration said utilities pulled 53 billion cubic feet of gas from storage during the week ended on March 10, a little shy of the 56 bcf draw that analysts had forecast in a Reuters poll.

That compared with declines of 9 bcf a year earlier and a five-year average of 85 bcf for that seven-day period. Traders and analysts said heating demand was fast becoming less of a factor as temperatures edge higher for the spring, making high stockpiles, low production and rising exports more important.

 

Outlook

We expect Natural gas prices to trade sideways on the back of profit booking after sharp up-move in prices.

 

Base Metals

Copper rose for a fifth session on Thursday as stoppages at three of the world's biggest mines raised supply concerns and a weaker dollar made metals cheaper for holders of foreign currencies.

Industrial action at Chile's Escondida mine and Peru's Cerro Verde, along with a dispute over mining rights at Indonesia's Grasberg, have resulted in 200,000 tonnes of lost production, Goldman Sachs estimates. The mines together account for 13 percent of global copper supply, the bank says.

Striking workers at Escondida on Thursday blocked attempts by the mine's owner to renew operations at a key port nearby. Goldman said the market was eating through excess supplies from last year and the copper price could rise to $6,200 over the next three months.

Chinese data on Thursday showed that its base metals output rose quickly in the first two months of the year as producers responded to higher prices by ramping up output.

 

Outlook

We expect base metal prices likely to trade volatile on the back of mixed fundamentals.

 

 

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