Comex gold prices retreated around 2.75% on Monday due to sharp rise in US 10 year treasury yields - ICICI Direct
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Bullion Outlook
• Comex gold prices retreated around 2.75% on Monday due to sharp rise in US 10 year treasury yields.
• US dollar index surged to multi year high, supported by fears of a global economic slowdown and bets on steep interest rate hikes by the US Fed, which has continued to pressurise the precious metal prices on higher side
• However, pessimistic sentiments in the global markets along with rising inflation restricted further downsides in bullion prices
• MCX gold prices are expected to trade with a negative bias due to rising dollar index. It is trading below the mean levels of | 50,885. As long as it sustains below this level, it is likely to correct towards mean-2 sigma levels of | 50,230 in the coming days. Silver prices are expected to take cues from gold prices and may slip towards | 59,500 levels for the day
Base Metal Outlook
• MCX Aluminium and other industrial metal prices eased on Monday as Covid-19 lockdown restrictions in China's feared concerns about slowing demand for industrial metals
• At the same time, weaker sentiments in the global markets coupled with elevated dollar index weighed on industrial metal prices. • However, significant decline in LME inventories of aluminium prevented further downsides in aluminium prices. Aluminium stocks in LME registered warehouses declined to 423,975 tonnes compare with two million tonnes in March 2021.
• MCX Aluminium prices are expected to correct further towards | 218 levels for the day due to worries over slow down in global economic growth and uptick in dollar index. Additionally, investors will keep an eye on PPI data from the US
Energy Outlook
• WTI crude oil prices slipped almost 0.50% on Monday as a surge in Covid-19 cases in Beijing raised concern about fuel demand • Moreover, prospect of further monetary tightening by US Fed to combat rising inflation weighed on oil prices
• However, oil supplies are tight, with Opec and allies unable to fully deliver on pledged output increases because of a lack of capacity in many producers, sanctions on Russia and unrest in Libya that has slashed output
• MCX crude oil prices are expected to trade in the consolidation range of | 9,250 to | 9,550 for the day due to significant decline in US crude oil Strategic Petroleum Reserve (SPR) and rising demand from the US. However, concerns over lower fuel demand from the China will continue to pressurise the prices on higher side. Additionally, market participants will remain cautious ahead of OPEC Monthly report.
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