IGI Logo

Gold gained nearly 3% last week after weaker US economic data raised prospects of a rate cut. The June non-manufacturing ISM showed the services sector contracted at its fastest pace since COVID, while job data confirmed a build in disinflationary pressure. Silver held above $31 an ounce after jumping by more than 7% last week.

Among Asian central banks, the Reserve Bank of India added more than nine tons in June, based on calculations using weekly data. That’s the most since July 2022 and means India’s reserves have expanded by 37 tons this year to 841 tons.

China's central bank did not buy any gold in the month of June, thereby marking the second straight month of no addition to reserves. This was a pause while gold prices eased from their record highs. According to official data published Sunday, the People's Bank of China held 72.8 million troy ounces of gold at the end of June, while in May, it ended an 18-month buying spree during which gold prices surged to unprecedented levels.

Money managers have decreased their bullish gold bets by 4,823 net-long positions to 184,710, weekly CFTC data on futures and options show. The net-long position was the most bullish in a month.

MCX Gold price is likely to head toward a life high of 74452 in the coming weeks as it has given a breakout from four weeks’ consolidation.

COMEX silver also placed near a month’s high and sustained above $31. At the domestic front sustainable trade above 95000 can lead to surpassing of psychological level of 1 lakh in the coming weeks.

Crude oil rallied last week on geopolitical tensions and falling inventories that buoyed market sentiment. Geopolitical supply risks have abated, as Ukrainian President Zelenskiy said the country is finding ways to supply gas to the European Union.

Tropical Strom Beryl is expected to regain hurricane status and threaten US oil output.

US oil inventories fell by 12mbbl against expectations of 0.9mbbl. The decline of 2.2mbbl in gasoline stockpiles was also more than expected. This was driven by strong underlying demand.

US road travel remains relatively strong and helped push implied gasoline demand up for the first time this year on a four-week basis. US air traffic hit a record high on 23 June.

Strong domestic demand in Saudi Arabia tightened supply, with exports falling to 5.61mb/d in June. OPEC+ production was 26.98mb/d in June, as a few members exceeded output quotas. Iraq produced 250kb/d above its quota in June.

Natural gas futures posted a nearly 11% weekly drop on Friday, pressured by an apparent slowdown in demand that came ahead of the Fourth of July holiday — and prices could see further declines with Hurricane Beryl forecast to hit parts of Texas, potentially slamming demand for the fuel.

MCX Crude oil price is expected to surpass the trendline resistance placed at 7060 while Natural gas could head south towards 175.

In the week gone, base metal prices traded higher following risk-on sentiments and expectations of lower interest rates after dismal US economic data.

Copper prices headed towards $10,000/t as market sentiment was buoyed by increasing expectations of monetary policy easing by the Fed. China’s improving macroeconomic outlook supported a view that copper demand is recovering in H2 2024. Bullish inventory withdrawals from the LME warehouse and retreating stocks at the SHFE.

Fundamentals side, the rise in copper prices triggered market sentiment of fear of high prices, leading some downstream producers to increase their restocking, but as it is currently the off-season for consumption, the purchasing volume cannot sustain an increase.

Nickel closed above USD17,000/t the week after the LME announced a suspension of nickel deliveries from a Harjavalta plant in Finland owned by Norilsk from 3 October. This plant produces 65kt of refined nickel, one of the largest refining plants in Europe.

Zinc prices got support from Chinese smelters’ production cut. Zinc and lead output from top supplier China is under the spotlight as investors weigh further cuts from the nation’s smelters after spot treatment charges — a gauge of processing margins — plunged. So-called TC for zinc concentrate fell to the lowest level in data back in 2016, while those for lead ore dropped to the lowest since 2018 amid a global mine supply shortfall. That’s seen to support prices of the two base metals.

Please refer disclaimer at https://www.hdfcsec.com/article/disclaimer-1795

SEBI Registration number is INZ000171337