Copper prices declined 0.72% on Tuesday - ICICI Direct
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Bullion Outlook
* MCX gold prices gained 0.58% on the back of weakness in the dollar index and decline in US treasury yields while investors awaited key US inflation data
* A weaker dollar reduces bullion’s cost for buyers holding other currencies while lower yields reduce non-interest bearing bullion’s opportunity cost
* US Federal Reserve officials are focused on a debate over how many more jobs the economy can add and how much longer high inflation can be tolerated
* MCX gold prices are likely trade in a range of 47,950 to 48,600 levels with positive bias due to risk aversion in global markets and worries over higher inflation. Meanwhile, investors will remain cautious ahead of CPI data from US
Base Metal Outlook
* Copper prices declined 0.72% on Tuesday on the back of liquidity crisis in the Chinese real estate market and risk aversion in global equity markets. However, a sharp fall was prevented by a decline in dollar index and low LME warehouse inventories
* Electricity price hike in Europe and energy shortages in China also posed risks of reduced demand from metal users
* LME copper inventories 109,550 tonnes, the lowest since March and down by more than half over the past two months
* MCX copper prices are likely trade in a range of 715 to 740 levels with negative bias on the back of concerns over China's real state sector and risk aversion in global markets. Going ahead, investors will now focus on CPI data from China and the US
Energy Outlook
* Crude oil prices surged by 1.95% on Tuesday after the US lifted travel restrictions and other signs of a global post-pandemic recovery boosted the demand outlook
* According to the recent US Energy Information Administration report, The Short-Term Energy Outlook predicted that the market will be oversupplied early next year and prices will fall in December from current levels
* US Natural gas futures declined by 8.29% on Tuesday amid warmer weather in US, data signalling an increase in Russian gas flows to Europe. Further, the EIA projected dry gas production will rise to 93.34 billion cubic feet per day in 2021
* MCX crude oil prices are likely trade in the range of 6150 to 6300 levels with positive bias due to stronger demand from the US and tight supply
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