Commodity Market Report For Bullion, Crude Oil, Base Metals

Bullion

Gold

Last week, spot gold prices traded 1.2 percent higher while MCX gold prices surged by 2 percent. Weakness in the dollar index on account of the possible delays in the long awaited US Tax reforms, fall in global equities were factors responsible for the rise in the yellow metal. Markets are pricing a 97 percent likelihood of a rate increase in December, according the CME Fed watch tool, and the pace of subsequent rises could be faster if the Republican tax proposal was enacted and succeeded in speeding economic growth. The report from the World Gold Council also pointed that the gold demand in India could possibly fall in the fourth quarter on account of high prices, GST implementation and the factors alike.

Silver

Spot silver prices rose 0.6 percent to close at $16.9 per ounce without lack of clues from other asset class. On the MCX, silver prices rose 1.2 percent to close at Rs.39507 per kg.

Outlook

We expect gold prices to trade higher as weakness in global equities will be supportive. Also, increased concerns regarding delay in the implementation of tax play by the US government coupled with a weak dollar index will act as positive factors. On the MCX, gold prices are expected to trade flat today, international markets are trading flat at $1275 per ounce.

Energy

Crude Oil

WTI and MCX oil prices traded higher by 2.7 and 4.4 percent last week on account of commitment by the OPEC nations to cut oil output. Brent crude hit $64.65, its highest since mid-

2015, as political tensions in the Middle East escalated after a sweeping anti-corruption purge in top crude exporter Saudi Arabia, which in turn has confronted Iran over the conflict in Yemen.

The Organization of the Petroleum Exporting Countries' 2017 World Oil Outlook showed the group predicts demand for its crude will rise more slowly than previously expected in the next two years, as higher prices from its supply policy stimulate output growth from rival producers.

The U.S. Energy Information Administration (EIA) said that U.S. crude production rose to 9.620 million barrels per day during the week of Nov. 3, the highest weekly output on record according to federal energy data going back to 1983.

Outlook

We expect oil prices to trade sideways today as anti-corruption drive in Saudi continue to support prices although a surprise build in the US inventory and reports of decline in imports by China will limit upside. On the MCX, oil prices are expected to trade lower today, international

Markets are trading flat at $56.78 per barrel.

Base Metals

Base metals traded mixed last week as electric car boom fizzled out earlier than expected since the rally was deemed as unreasonable given demand from the sector is only going to be supportive in the long term, thereby leading to a correction across the complex. MCX base metals traded mixed in line with international trends.

Copper

LME Copper prices fell by 1.6 percent last week to close at $6786/t hurt by stronger DX in the earlier half and mixed economic data from China. China’s trade surplus narrowed to $26.62 billion in October, well below the $39.50 billion expected. Customs data from China showed import volumes of unwrought copper fell to the lowest since April, totaling 330,000 tones in October, down more than 20% from September. While on the other hand, China's consumer inflation rate accelerated to 1.9 percent in October compared to expectations of 1.8 percent and Producer prices rose 6.9 percent. Besides, global investors took profits since electric car is demand is only going to be supportive in the long term and the rally was unreasonable. However, sharp downside was restricted as dollar lost momentum in the latter half after the US Senate revealed that its tax plan would delay cuts to the corporate rate until 2019. MCX Copper prices traded lower by 0.3 percent to close at Rs.444.4 per kg.

Outlook

LME Copper prices are currently trading higher by 0.5 percent at $6821.5/t. Copper prices are likely to trade higher today as tensions at Freeport mine in Indonesia along with a weaker DX will be supportive although crucial data from the US and China this week will keep investors wary.