Copper may rise on weak dollar, global risk appetite, China demand - ICICI Direct
Bullion Outlook
* Spot Gold is likely to rise towards $3580 level on weak dollar and softening of U.S treasury yields across curve. Further, weak job data cemented expectation of rate cut by US Fed in upcoming meeting. As per CME FedWatch tool market is pricing 99.4% probability of 25bps rate cut in upcoming meeting. Moreover, several Fed officials said labor market worries continue to strengthen their view that rate cuts lies ahead for the central bank, boosting expectations of an imminent rate cut. Additionally, investors will remain cautious ahead of non-farm payrolls data to get more insight on economic health of the country and interest rate trajectory. Furthermore, demand for safe haven may increase on trade uncertainties, lingering geopolitical tensions and worries about fiscal health of major economies
* MCX Gold Oct is expected to rise back towards Rs.107,000 level as long as it stays above Rs.105,800 level
* MCX Silver Dec is expected to slip towards Rs.122,500 level as long as it trades below Rs.125,000 level.
Base Metal Outlook
* Copper prices are expected to trade with a positive bias on expectation of further weakness in dollar and rise in risk appetite in the global markets. Moreover, prices may move north on signs of increasing demand from China. Yangshan copper premium a gauge of China's appetite for importing copper rose to $57 a ton up from $29 a ton in July. Additionally, on supply side market continues to face issue. Codelco said Chile’s copper production could stagnate at approximately 5.5mt/y due to mounting industry challenges. Meanwhile, all eyes will be on crucial non-farm jobs report as it will help to set prospects for the central bank's next few policy meetings.
* MCX Copper Sep is expected to rise towards Rs.905 level as long as it stays above Rs.898 level. Only a break below Rs.898 level prices may witness weakness and slip towards Rs.894 Level
* MCX Aluminum Sep is expected to slip further towards Rs.252 level as long as it stays below Rs.254.50 level. MCX Zinc Sep is likely to move south towards Rs.270 level as long as it stays below Rs.275.5 level.
Energy Outlook
* Crude oil is likely to trade with negative bias and slip towards $62.0 level on surprise build in US crude oil stockpiles. EIA said energy firms added 2.4 million barrels of crude into storage. Both EIA and API data showed rise in crude stockpiles, signaling weak demand. Further, weaker than expected economic data from U.S fueled the concerns over economic health of the country. Moreover, investors are worried that U.S tariffs will hurt global economic growth when countries are struggling to regain momentum. Meanwhile, all eyes will be on OPEC+ meeting to get any cues on further output hikes. We don’t see group making any further changes to production, it will wait for more data.
* WTI crude oil is likely to slip towards $62.0 level as long as its trades below $64.50. MCX Crude oil Sep is likely to dip towards Rs.5450 level as long as it stays below Rs.5720 level.
* MCX Natural gas Sep is expected to rise towards Rs.280 level as long as it stays above Rs.264 level.
Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
SEBI Registration number INZ000183631
