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Bullion Outlook

• Gold futures rallied to their six month high on Tuesday as US 10-year treasury yields slipped while silver futures surged to hit its eight month high at $24.77

• The 10-year yield slipped below the 3.8% mark amid prospects that the Federal Reserve will gradually move away from its aggressive stance as the US could slip into a recession later this year

• However, a strong rebound in the US dollar index capped further gains in precious metals

• MCX gold is expected to trade with a positive bias and move towards the initial target at 55800, followed by 56000 amid a decline in US 10 year treasury yields. Further, investors will closely watch JOLTs job openings data from the US, which is expected to drop from 10.33 million to 10.00 million and FOMC meeting minutes

Base Metal Outlook

• Copper and aluminium prices tumbled yesterday due to a sharp rise in the US dollar and deteriorating demand prospects on account of weak growth in top metals consumer China and other major economies

• Further, copper prices were pressurised as the Caixin China General manufacturing PMI fell to 49.0 in December 2022, the lowest since September and compared with the market forecast of 48.8 as a spike in Covid-19 cases disrupted production

• However, further downside was restricted on a drop in copper inventories at LME registered warehouses

• Copper prices are expected to trade with a negative bias for the day amid a strong dollar, concerns over a global economic slowdown and worsening Covid-19 situation in China. MCX Copper is likely to slide towards the key support level of 711 to trade in a downward trend

Energy Outlook

• Natural gas futures extended their losses on Tuesday as warmer weather in Europe and ample domestic storage weighed over prices to hit its lowest level in the last 10 month

• Crude oil prices failed to capitalise its gains above the $80 mark and moved lower amid weak demand data from China, a gloomy economic outlook and a stronger US dollar. Further, crude oil prices were pressurised as the world's largest crude importer China continues to battle waves of infections

• Crude oil prices are likely to trade with a negative bias for the day amid a strong dollar and rising concerns over global economic slowdown, which may dent global fuel demand. MCX Crude is expected to slide towards the 20 day EMA support level at 6380. A move below 6380 would weaken the price towards the next key support level at 6200

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