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Outlook and Strategy

Silver Strategy

Sell MCX Silver Mini November Futures around Rs. 64,700-64,800 for target of Rs. 62,000 with Stop loss of Rs. 66,000

Rationale:

Silver prices are expected to trade with a negative bias on the back of lower industrial demand. Additionally, MCX Gold to silver ratio chart suggests that silver prices are going to underperform gold prices mainly due to ratio holding strong support at 0.72 levels. Going forward, we expect the ratio to head towards 0.76 to 0.77 levels for this week.

Bullion: US China geopolitical tensions, rising inflationary pressures likely to lift gold prices…

* Gold prices rose by 0.5% in the last week, as rising inflation fears, US China Geopolitical tensions and decline in US Treasury yield boosted the demand for safe haven metal

* US benchmark 10 -year treasury yields fell to a two -week low of 1 .54 , reducing opportunity cost of holding non -yielding bullion

* At the same time, concerns over a rise in Coronavirus cases in China and European region increased the demand for gold

* According to the World Gold Council report, gold demand declined by 7 % to 831 tonnes for July -September 2021 period, mainly due to outflows from Gold ETF funds . However, jewellery demand continued to draw strength from the ongoing global economic recovery.

Gold Outlook

* MCX Gold prices are likely trade in the range of 47 ,400 to 48 ,300 levels with positive bias largely due to rising inflationary pressures and US China geopolitical tensions.

Silver Outlook

* Silver prices are expected to trade with a negative bias mainly due to lower industrial demand . MCX Silver price can drag down towards 63 ,000 to 62 ,800 levels for this week.

Base metals: Increasing mine supply may pressure industrial metal prices..

* Copper declined 1 . 8 % in the previous week mainly due to weak Chinese factory output, debt problems in the real estate market and an energy crunch

* Aluminium dropped by 8 % in the last week on the back of falling thermal coal prices eased supply concerns and demand remained weak due to stoppages of automotive production

* On -warrant inventories of aluminium available to the market in LME - registered warehouses eased to 625 ,350 tonnes, near its lowest since 2018

* Brazilian miner Vale SA will resume operations at its Onca Puma nickel mine after obtaining a federal court order lifting an injunction that had suspended an operating licence.

Copper Outlook

* Copper prices are likely to correct further for this week on the back of rising production and concern over resurgent of coronavirus cases in China, which may hamper the demand . MCX Copper prices are expected to fall further towards ₹ 710 level if sustains below ₹730 level for this week

Aluminum Outlook

* Aluminium prices are expected to trade with mixed bias on the back of lower demand from Auto industry . However, falling inventories may provide support on lower side . On MCX, Aluminium prices are likely to trade in the range of 210 to 230 for this week .

Energy: Rising domestic fuel demand from US, return of Iranian supply may neutralise crude oil prices…

* Oil prices declined 3% in the previous week after rising cases of Covid-19 in Europe, Russia, and some outbreaks of infections in China dented hopes of an economic recovery

* Iran and the European Union agreed on Wednesday to restart negotiations on reviving the 2015 nuclear programme, which is likely to increase the crude oil supply in the markets

* According to EIA weekly report released on Wednesday, US crude oil inventories increased by 4.27 million bbls over the last week

* Over the past one week, WTI Brent spread has narrowed down to $0.89 barrel from $1.77/barrel largely due to increasing domestic crude oil demand from US. Further, Brent prices came under pressure due to expectations of returning Iranian supply and rising Covid cases in China renewed demand concerns

Crude oil Outlook

* Crude oil prices are likely to trade with a mixed bias due to expectations of returning Iranian supply which may put pressure on oil prices. However, increasing fuel demand from US may support the prices on lower side.

Natural gas Outlook

* Natural gas prices are expected to rise towards 480 levels on the back of colder weather forecasts by NOAA , with expectations of increase in heating demand for this winter and continuing demand for power generation use may also support the natural gas prices.

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