MCX gold prices surged 1.16% after US CPI data increased - ICICI Direct
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Bullion Outlook
MCX gold prices surged 1.16% after US CPI data increased more than expected in October, which boosted the demand for safe haven. However, sharp gains were prevented by a stronger dollar index and rise in US treasury yields
US consumer inflation increased to 6.2% in October 2021, the highest since 1990 and above forecasts of 5.8%, rising speculation that the Federal Reserve may increase interest rates sooner than expected
US benchmark 10-year treasury yields increased to 1.55, increasing opportunity cost of holding non-yielding bullion
MCX gold prices are likely trade in a range of 48,500 to 49,300 levels with positive bias due to concerns over higher inflation and risk aversion in global markets. Further, weakness in rupee against dollar may support gold prices on the higher side
Base Metal Outlook
Copper prices declined 0.85% on Wednesday on the back of stronger dollar index and concerns about liquidity crisis in the Chinese property markets. However, a sharp fall was prevented by low LME warehouse inventories
LME copper inventories LME-registered warehouses slipped to 106,125 tonnes, the lowest since March and down by more than half over the past two months
Protesters in Peru's Cotabambas province on Tuesday blocked once again a key mining corridor used by MMG Las Bambas copper mine
Copper prices are expected to trade with a negative bias on the back of a stronger dollar index and demand concerns from China. MCX Copper price will likely to correct towards its 200 day moving average, which comes to around 720 levels. If it closes below it, one further downside can be expected in the coming sessions
Energy Outlook
Crude oil prices declined 2.82% on Wednesday on the back of stronger dollar index, higher supply from US SPR and rise in US crude oil inventories
According to EIA figures showed on Wednesday, the Biden administration has released around 3.1 million barrels from the SPR, the largest one week release since July 2017. Further, they are discussing whether to announce more releases from the SPR to control rising oil prices
US crude oil inventories increased by 1.01 million barrels per day over the last week
MCX crude oil prices are likely trade in the range of 5900 to 6200 levels with negative bias due to demand concerns from China and expectations of higher supply from US Strategic Petroleum Reserve
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