Copper prices are likely to trade lower on firm dollar and easing tightness in the market - ICICI Direct
Metal’s Outlook
Bullion Outlook
• Spot gold is expected to trade lower towards $4235 as long as it stays under $4380 per ounce. A strong dollar and growing bets of another rate hike in this year would weigh on prices. As per the CME Fed-watch toll, December rate hike probability has surged to 88% after the hawkish statement form the US Fed. Moreover, growing bets of 25 bps rate hike from BOJ would also weigh on prices. However, a recent correction in oil prices driven by easing concerns over Middle East supply disruptions could limit further losses. Investors are also closely monitoring upcoming commentary from the Bank of England, where the central bank is widely expected to hold interest rates steady..
• MCX Gold October is expected to slip towards Rs 149,000 as long as it stays under Rs154,000 level. A move below Rs 149,000 it would weaken towards Rs 147,500.
• MCX Silver December is expected to slip towards Rs 228,000-Rs 230,000 levels as long as it trades below Rs 240,000
Base Metal Outlook
• Copper prices are likely to trade lower on firm dollar and easing tightness in the market. Rising global exchange inventories are helping to reduce supply worries. In LME cash contracts are trading at a discount to 3- month forwards, which indicates easing physical tightness or demand from the US. Moreover, further delay on import tariffs on refined copper by US would cool down the premiums and prompt some liquidation. Meanwhile, strong economic data from China ahead of the traditional peak consumption season would provide support to prices.
• MCX Copper September is expected to face hurdle near Rs1384- Rs 1388 level and move lower towards Rs 1360. Only a move below Rs 1360 level, it will turn weaker towards Rs 1350.
• MCX Aluminum September is expected to hold support above Rs 348 level and rise towards Rs 355. MCX Zinc September is likely to hold above Rs 414 and rise towards Rs 425 levels.
Energy Outlook
• Crude oil prices are expected to trade lower amid growing optimism over improved supply from Saudi Arabia. Market anticipation is rising as the East-West pipeline is projected to reach full operating capacity within the next six weeks, significantly easing supply concerns by allowing oil to bypass the vulnerable Strait of Hormuz. While Saudi Arabia has stepped up efforts to secure its crude transport with assistance from the US military, US Energy Secretary Chris Wright noted that 18 million barrels of crude and petroleum products still successfully passed through the Strait earlier this week.
• NYMEX crude oil is expected to slip towards $100 per barrel as long as it stays under $106 mark. MCX Crude oil October is expected to slip towards Rs 9000-Rs 9200 as long as it trades under Rs 9700 level.
• MCX Natural gas September is expected to hold above Rs 272 level and rise towards Rs 285- Rs 288 level.
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