Copper prices are expected to hold its gains and move higher on concerns over supply shortage - ICICI Direct
Metal’s Outlook
Bullion Outlook
* Spot Gold is likely to trade with the positive bias and rise towards $4250 level on weak dollar and softening of US treasury yields. Further, prices may rally amid growing probability of December rate cut. As per CME FedWatch tool traders are now pricing almost 89% chance of a rate cut in December, up from 84% a week ago. Moreover, prices may rally on strong central bank demand for gold and as the concern over Fed independence resurfaced after White House National Economic Council Director Kevin Hassett emerged as the front-runner to serve as the next Fed chair. Hassett's nomination would be bearish for the dollar as he is seen as the most dovish candidate.
* MCX Gold Feb is expected to rise towards Rs.131,000 level as long as it stays above Rs.129,200 level.
* MCX Silver March is expected to rise towards Rs.183,000 level as long as it stays above Rs.176,000 level. A move above Rs.183,000, would open the doors towards Rs.186,500.
Base Metal Outlook
* Copper prices are expected to hold its gains and move higher on concerns over supply shortage. A drop in Chilean production and higher premiums would keep copper price elevated. Chile’s October production of copper fell by 7% YoY to 458,405 tonnes. Additionally, growing prospects of US Fed rate cut in next week would improve investors risk sentiments and support the red metal to trade higher. Meanwhile, Yangshan copper premium dropped to its lowest level since July, signaling weak demand, restricting any major upside in price.
* MCX Copper Dec is expected to hold support near Rs.1037 and move higher towards Rs.1055 level. Only break below Rs.1037 level it may fall towards Rs.1030-Rs.1025 level.
* MCX Aluminum Dec is expected to rise towards Rs.277.50 level as long as it stays above Rs.273 level. MCX Zinc Nov is likely to move in the wide range of Rs.305 level and Rs.310 level. Only below Rs.305 it would turn weaker towards Rs.300
Energy Outlook
* Crude oil is likely to hold support near $58 per barrel and move higher towards $60 on escalating geopolitical risks. Further, delay in peace deal between Russia and Ukraine could hurt oil supplies from Russia. Recent discussion between Russia and US on the peace deal has been ended with no positive outcome. Further, tension between US and Venezuela could also hurt global supplies. Meanwhile, rise in API crude oil and fuel inventories could restrict its upside. Moreover, investors will also eye on US weekly inventory data to get further clarity on price direction.
* MCX Crude oil Dec is likely to hold support near Rs.5240 level and move higher towards Rs.5400 level. Only a move below Rs.5240 it would turn weaker towards Rs.5150.
* MCX Natural gas Dec is expected to rise towards Rs.446 level as long as it stays above Rs.430 level. Colder US weather forecast would boost heating demand.
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