IGI Logo

Bullion: Higher inflation, elevated dollar index to keep gold prices in consolidation

• MCX gold prices surged around 1.51% in the previous week on the back of concerns about further sanctions against Russia

• Further, total holdings at SPDR Gold ETF have increased to 1090 tonnes from 1087 tonnes over previous week, indicating significant investment demand rebounded to safe haven assets amid higher inflation and rising geopolitical tensions

• On the domestic front, rupee depreciation against dollar extended further support to MCX gold prices

• However, better-than-expected jobless claims data from the US restricted further upsides in bullion prices. Additionally, US 10 year bond yields rebounded to almost three-year highs last week after the hawkish stance from US Fed meeting minutes, increasing the opportunity cost of holding non yielding bullion

Gold Outlook

• MCX gold prices are likely to trade in a consolidation rage of | 52,500 to | 51,200 for this week due to expectation of higher consumer price inflation data from the US. However, rising dollar index may continue to pressurise gold prices on the higher side

Silver Outlook

• Silver prices are expected to take cues from gold prices and trade in the range of | 65,500 to | 68,500 in the coming week

Base metals: Supply disruptions from Russia, easing manufacturing PMI to keep industrial metal prices in tight range

• MCX copper prices traded flat last week amid Covid-19 restrictions in China, which raised worries about the economic outlook of the top metals consumer

• Also, a sharp rise in LME inventories put some pressure on the commodity. LME registered warehouse stockpiles of copper increased to 103,775 tonnes from 93,975 tonnes in the past one week

• At the same time, expectations of aggressive monetary tightening measures by the US Fed boosted the dollar index almost to a twoyear high, making metals costlier for holders of other currencies

• However, supply concerns from Russia and lower copper production from Chile provided significant support to copper prices and restricted downsides

Copper Outlook

• MCX copper prices are expected to trade in the range of | 800 to 830 levels for this week on expectation of more stimulus from China’s central bank. However, a rebound in copper inventories and stronger dollar index will continue to weigh on copper prices

Aluminium Outlook

• MCX aluminium prices are expected to trade in the range of | 268- 290 levels amid tight supply. However, expectation of aggressive monetary tightening by the US Fed may lower aluminium prices

Energy: MCX Crude likely to trade in range of | 7,200 to 7650…

• MCX crude oil prices slipped 2.50% in the previous week amid International Energy Agency (IEA) member countries agreeing to release oil from their reserves to cool down fuel prices

• Further, US crude oil inventories surged by 2.42 million barrels over last week, which added further pressure to oil prices

• CFTC data on Friday showed large speculators reduced their net positions in Nymex crude oil contract to 308,600 from 318,700 contracts last week, suggesting bearish sentiment in the oil markets

• On the options front, significant call option and put open interest build up was seen between $95 strike and $100 strike (April 14, expiry), which suggests oil prices are likely to trade in this range for this week

Crude oil Outlook

• MCX crude prices are likely to trade in the range of | 7,200 to 7650 for this week due to a delay in removal of US sanctions on Iranian oil and supply disruptions from Russia. However, a surge in US crude oil stockpiles and excessive oil supply from global reserves are expected to pressurise crude oil prices on the higher side

• Natural gas prices are expected to rise further towards | 530 levels for this week due to lower supply from Russia and on higher demand from European countries

Natural gas

Outlook and Strategy

Buy MCX Natural gas April Futures around | 475-480 for target of | 530 with Stop loss of | 448

Rationale: MCX natural gas prices are expected to rise further towards | 530 levels primarily due to lower gas flow from Russia to Europe via the Ukraine pipeline. Further, higher demand from European countries will continue to provide some support to natural prices on the downside. Additionally, a consistent decline in US natural gas storage levels may boost prices in coming days

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

Above views are of the author and not of the website kindly read disclaimer