Gold prices edged higher on Tuesday, after two straight sessions of declines - ICICI Direct
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Bullion Outlook
* Gold prices edged higher on Tuesday, after two straight sessions of declines, as the dollar weakened and bolstered the appeal of the precious metal as a cushion against inflation
* Supporting gold by making it cheaper for buyers in other currencies, the dollar fell and languished near the lows of its recent range. US benchmark 10-year Treasury yields also weakened, reducing non-yielding bullion’s opportunity cost
* Bank of England Governor Andrew Bailey sent a fresh signal for early UK rate hikes by saying that the BoE will “have to act” to counter rising inflation risks
* Gold and silver prices are expected to trade with a mixed bias as a weaker dollar and US bond yields are likely to provide some support to the precious metal, even as central banks move towards easing economic stimulus
Base Metal Outlook
* Copper prices remained supported on Tuesday as industrial users sought material from declining inventories while speculative buyers also piled in
* LME cash copper's premium over the three-month contract hit a record high of $1,103.50 a tonne, compared with only $55 a week earlier, indicating extremely tight near-term inventories
* A weaker dollar also made greenback-priced metals cheaper to holders of other currencies, and a Peruvian community threatening to block a key mining road used by MMG’s Las Bambas copper mine also supported prices
* Base metal prices are expected to trade with a positive bias as decades-low supplies and an extreme shortage of readily available metal in exchange warehouses are likely to support prices.
Energy Outlook
* Oil rose on Tuesday and was near multi-year highs as an energy supply crunch continued across the globe while falling temperatures in China revived concerns over whether the world's biggest energy consumer can meet domestic heating needs
* A shortage of natural gas and coal from Asia to Europe is driving additional demand for oil products in power generation. That has coincided with key economies rebounding from the pandemic, leading to a significant tightening of the market
* US natural gas futures slipped to a near four-week low on Tuesday on forecasts of milder than normal weather and lower than usual heating demand through early November
* Crude oil prices are expected to trade with a positive bias as rising coal and natural gas prices in Asia are expected to cause some endusers to switch to lower-cost oil as an alternative
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