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GLOBAL MARKET ROUND UP

A risk-off tone across saw commodities come under renewed pressure. This offset optimism about a China reopening that should benefit commodity demand.

Gold steadied as traders weighed the impact of unexpectedly robust US services data on the Federal Reserve’s monetary policy, as well as the easing of China’s Covid-Zero policies. The stronger-than-expected US services data for November boosted chances that the Fed will keep interest rates higher for longer. This weighed on gold, with spot prices breaking back below USD1,800/oz.

India’s trade ministry is discussing a reduction in import taxes on gold to rein in illegal shipments.

Crude oil prices came under pressure late in the session after strong economic data raised fears the Fed will continue with its aggressive rate hikes. This was exacerbated by signs of weak demand for crude. Saudi Arabia lowered prices for crude in Asia and Europe.

Copper also opened the week strongly, buoyed by easing restrictions in China. Chile’s government raised the amount it says copper miners pay in taxes. Producers currently pay 34.8% of profit in taxes based on a price of $3.74 a pound, a burden that would increase to 43.2% under a proposal presented to congress, according to a new document released by the Finance Ministry.

Commodity Daily| BULLION

COMEX Gold pricessank below key levelstoday, with metal markets back under pressure asstronger-than-expected U.S. data boosted the dollar and ramped up uncertainty over strength in the U.S. economy and how the Federal Reserve will respond to it. The dollar rose for the first session in four on Monday, recovering from a five-month low after U.S. factory orders and servicessector data showed that some facets of the economy were running well above expectations, which could feed into inflationary pressures. This could push the Fed into raising ratesfor longer than expected. Such a scenario would be negative for most non-yielding assets, with gold likely to be impacted the most

Trading Strategy: MCX Gold Feb Future and Silver March Fut formed a bearish engulfing pattern on the daily chart, which could push the price further lower. Support for Gold Feb Fut is seen at 52775. Resistance to the same is seen at 54228. Support for Silver Mar Fut is seen at 64500, below which it could slide to 62200. Resistance is seen at 67400.

Commodity Daily| ENERGY

Oil rose after a two-day drop on more signs China is moving away from its strict Covid Zero policy, and as investors assessed the implications for global flows from the price cap imposed on Russian crude. West Texas Intermediate climbed toward $78 a barrel following a roller-coaster session on Monday, when a broad shift away from risk assets saw prices close down 3.8% after earlier gains. The city of Beijing will scrap Covid testing requirements at public venuesfollowing similar movesin other centres, bolstering the outlook for demand in the world’slargest crude importer

Trading Strategy: MCX crude oil Dec. fut could witness a short-covering bounce after Monday’s selloff. The trend remains bearish as long as it trades below short-term moving averages. In the near-term, crude oil has support at 6340 and resistance at 6770.

Commodity Daily| BASE METALS

Industrial metal prices ended on a mixed note on Monday with Aluminium and ZINC ending with gains while Copper ended with losses. Metal markets are back under pressure as stronger-than-expected U.S. data boosted the dollar and ramped up uncertainty over strength in the U.S. economy and how the Federal Reserve will respond to it. copper prices reversed early gains on Monday as fears of higher interest rates largely offset optimism over a potential recovery in Chinese demand. Weakness in the Stock market also weighed on copper prices.

Trading Strategy: Positional set-up remains strong for the base metals. Immediate support for MCX Copper December is placed at Rs. 681 and resistance at Rs. 699 and 705. MCX Zinc Dec support lies at Rs. 268, resistance at Rs. 278. MCX Aluminium Dec supportlies at Rs. 211 with resistance at Rs. 221.

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