MCX Silver is expected to follow gold and move towards 72,000 as long as it stays under 73500 level - ICICI Direct
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Bullion Outlook
Gold vs Silver
• Spot gold is likely to trade under pressure as Fed signaled that it is ready to raise interest rates next month if economy and inflation doesn’t cool further. Fed officials now see fed funds rate peaking at 5.6% this year compared to March projection of 5.1%. None of Fed officials expect rate cut this year. The CME FedWatch tool indicates more that 70% probability of 25% bps hike in July meeting
• MCX Gold prices are likely to weaken towards 58,800 as long as it trades under the 20 day EMA at 59,600 levels
• MCX Silver is expected to follow gold and move towards 72,000 as long as it stays under 73500 level
Base Metal Outlook
Copper vs Aluminium
• Copper prices are expected to hold their gains as China’s central bank lowered its borrowing cost of its medium term policy loans days after its lowered short term policy rates, providing more stimulus to boost economic growth. Meanwhile, expectation of further rate hike by Fed could restrict its gains.
• MCX Copper is likely to rise further till 735 as long as it stays above the 727 level
• MCX aluminium is expected to consolidate between 204 and 206
Energy Outlook
MCX Crude Oil vs. Natural Gas
• Crude oil likely to trade with negative bias amid a strong dollar and unexpected large build up in US crude stocks. Furthermore, rising probability of further rate hike by the Fed in the year 2023 to tame the inflation back towards the target level at 2% would weigh on the oil price. Meanwhile, sharp downside may be cushioned on hopes of growing fuel demand after PBOC lowered its medium and short-term lending rates
• MCX Crude oil is likely to decline towards 5550 mark as long as it stays under the 5850.
• MCX Natural gas is expected to find support near 188 and rise back towards 200 on expectation of drawdown in weekly inventory.
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