Crude oil may stay range-bound as weak demand offsets Russia-Ukraine risks - ICICI Direct
Bullion Outlook
* Spot Gold is likely to hold firm and move higher towards $3500 per ounce mark on growing probability of 25 bps rate cut in this year. Further, US political uncertainty and concerns over Fed independence would provide support to the yellow metal. Moreover, delay in peace negotiation between Russia and Ukraine would also add positivity to price. On the data front, latest CFTC data suggested fresh addition to net longs. Meanwhile, investors will focus on this week US job report to get more clarity on quantum of rate cuts in this year
* Spot Gold is expected to hold support at $3425 and move higher towards $3475. Only a sustained move above $3475 it would open the doors towards $3500. MCX Gold October is expected to rise towards Rs.104,800. A move above Rs.104,800 level, would open the doors towards Rs.105,500. Support holds near Rs.102,800.
* MCX Silver Dec is expected to rise towards Rs.124,000 as long as it holds above Rs.119,000 level. Only a move below Rs.119,000 it would turn weaker.
Base Metal Outlook
* Copper prices are expected to hold its ground and extend its rally amid soft dollar and lose monetary policy from the US Federal Reserve. Meanwhile, tariff concerns and contraction in Chinese manufacturing activity for the 4 th month in a row would restrict any major up move. China’s composite PMI output index stood at 50.5 in August, rising slightly in August from 50.2. At the same time manufacturing PMI came in at 49.4, below the neutral mark at 50, indicating contraction.
* MCX Copper September is expected to hold its ground and move higher towards Rs.905, as long as it trades above Rs.894level. Only below Rs.894, it would turn weaker towards Rs.889.
* MCX Aluminum September is expected to move in the band of Rs.251 and Rs.255 level. Only above Rs.255 it would turn bullish towards Rs.257. MCX Zinc September is likely to hold the support at Rs.269 and rebound towards Rs.272.50 level. Above Rs.272.50, it may open the doors towards Rs.276.
Energy Outlook
* Crude oil is likely to move in a tight range as weaker demand prospects would counter geopolitical uncertainty over Russia-Ukraine peace talks. Growing prospects of higher output from US and improved supply scenario from OPEC+ nations would accelerate supplies. Meanwhile, investors will eye on the upcoming OPEC+ meeting this week and key US job data to get further clarity in price direction. Today, we may see low volatility in price as US markets will remain closed in observance of Labor Day.
* On the data front, 60 put strike has higher OI concentration which would act as key support. On the upside 65 call strike, has higher OI concentration, which would likely to act as immediate hurdle. Above $65 it would rise towards $66.50. MCX Crude oil September is likely to consolidate in the band of Rs.5550 and Rs.5720 level. A move outside of the range would bring more clarity in price trend.
* MCX Natural gas September future is likely to rise towards Rs.270, as long as it trades above Rs.255.
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