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Bullion Outlook

Comex gold prices declined 0.16% on Monday amid elevated US treasury yields and stronger dollar index

The dollar index surged 0.34% on Monday amid rising expectations that the US Federal Reserve could reduce its asset purchases at a faster pace and may quickly raise interest rates in the next year amid signs of higher inflation, making bullion more expensive for holders of other currencies

US benchmark 10 year treasury yields rose to 1.39, increasing the opportunity cost of holding non yielding bullion

MCX Gold prices are likely to trade in a range of | 47,800 to 48,200 levels with a mixed bias on the back of rise in risk appetite in the US markets and elevated US treasury yields. However, a sharp downside may be prevented on weakness in Rupee against dollar.

Base Metal Outlook

Copper prices surged 0.95% on Monday after China cut its reserve requirement for banks and decline in LME inventories

For the second time this year China's central bank said it would cut the amount of cash that banks must hold as reserves, releasing long term liquidity to bolster slowing economic growth and industrial metals demand

LME inventories of the copper have dropped to 77,875 tonnes, the lowest since 2018.

MCX copper prices are likely to trade in a range of 725 to 738 levels with a positive bias due to easing liquidity from China's central bank. Further, supply disruptions and declining inventories may support the copper prices on lower side. However, a sharp upside may be prevented on expectations of US Fed’s earlier interest rate hike. Also, investors will keep an eye on import and export data from China.

Energy Outlook

Crude oil prices gained 3.15% on Monday as Saudi Arabia raised January Arab light crude price for Asia to near two year high and as the prospect of an imminent rise in Iranian oil exports receded

Saudi Arabia has increased January official selling prices (OSP) to Asia for its flagship Arab light crude to $3.30 a barrel versus Oman/Dubai crude, up $0.60 from December

Further, indirect US Iranian talks on saving the 2015 Iran nuclear deal which broke off last week, also supported the oil prices

MCX crude oil prices are likely to trade in a range of | 5,030 to 5,200 levels with positive bias due to diminishing prospects of a rise in Iranian oil exports and easing demand concerns over new coronavirus variant. Further, investors will anxiously await for an EIA short term outlook report due today

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