Crude likely to slip to $62.50 on strong dollar, weak global cues - ICICI Direct
Bullion Outlook
* Spot Gold is likely to correct further towards $3620 level on strong dollar and rise in U.S treasury yields across curve. Dollar and Yield may move further north as U.S Federal Reserve Chair Powell characterized the recent policy action as a risk-management cut in response to the weakening labor market, signaling central bank not in rush to ease further. Additionally, closely watched dot plot shows a median 50 bps of additional cuts over this year, but only 1 additional reduction in 2026. Moreover, updated forecast signal inflation is likely to run further above 2.0% and for longer, which may limit how much more the Fed can cut interest rates. Meanwhile, demand for safe haven may increase on escalating geopolitical tensions
* MCX Gold Oct is expected to slip towards Rs.108,600 level as long as it stays below Rs.110,000 level
* MCX Silver Dec is expected to slip towards Rs.124,500 level as long as it trades below Rs.127,500 level.
Base Metal Outlook
* Copper prices are expected to trade with a negative bias on strong dollar, solid supply outlook and muted demand from China. Top copper producer Chile expects national output to rise this year and next, aiming for a record 6 million tons by 2027. Further, disappointing economic data from China and U.S has raised concerns over slowdown in economic activity, denting demand for industrial metal. Moreover, higher metals output in China would weigh on prices. According to the data, China's copper production rose 15% yoy in August.
* MCX Copper Sep is expected to slide towards Rs.895 level as long as it stays below Rs.910 level. A break below Rs.895 level prices may plunge further towards Rs.890 level
* MCX Aluminum Sep is expected to decline towards Rs.254 level as long as it stays below Rs.260 level. MCX Zinc Sep is likely to move south towards Rs.277 level as long as it stays below Rs.281 level.
Energy Outlook
* Crude oil is likely to trade with negative bias and slip further towards $62.50 level on strong dollar and muted global market sentiments. Additionally, EIA data showed rise in distillate stockpiles by 4 million barrels compared to market expectations of 1 million barrels, raising concern about demand in U.S. Meanwhile, sharp fall in prices may be cushioned on concerns over supply disruption as Ukraine’s attacks on Russia’s energy infrastructure has intensified. Furthermore, US Fed lowered its interest rate by 25bps and signaled more rate cuts by year end, lower borrowing cost may boost economic growth and demand for oil
* WTI crude oil is likely to dip towards $62.50 level as long as it trades below $64.50. MCX Crude oil Oct is likely to slide towards Rs.5540 level as long as it stays below Rs.5700 level.
* MCX Natural gas Sep is expected to dip towards Rs.265 level as long as it stays below Rs.278 level.
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