Commodities Outlook: Precious and Base Metals steady, Crude Oil trending lower
London (Nov 16) Precious Metals to decline further as macroeconomic data weighs on prices. Precious Metals are trading with a mixed bias after declining sharply in the earlier session driven by stronger than expected economic data from the US. Gold is trading at 29498, down 27 points or 0.09% whereas Silver is at 29730, up 19 points or 0.05%.
We have another important day ahead on the data front with jobless claims, industrial and manufacturing reports from the US which is expected to bounce back after weakening in the previous month. Unemployment claims are set to decrease marginally to 235,000 from 239,000 in the previous week which even though reflects a small improvement could put bullions under selling pressure.
Technically, the uptrend in Gold looks fragile after prices failed to break above resistance at 29600 despite rallying to over 29700 late last night. A breakdown below support at 29400 could put the prices under a serious threat of reversing the trend and pushing to new lows in the coming weeks. We continue to maintain a cautiously neutral stance on precious metals.
Base Metals consolidate; intraday bias remains negative
Base Metals fell into a trading range after crashing sharply earlier driven by weaker data from China. We have had a mixed trading session since open today with Lead and Nickel down one-third of a percent whereas Copper is barely unchanged at 441.35.
The short-term bias in base metals is negative. Prices have come under pressure from both weaker data from China as well as an oversaturated speculative market which even though was driven by strong fundamentals continue to remain overpriced in the short term.
Traders should be cautious of the ongoing volatility and weakening correlation between the group metals. We could advise considering short selling base metals higher on rallies today.
Copper faces the next set of resistance at 445 breaking which another attempt at 448-50 is expected this week whereas, on the downside, a breakdown below 438 should see the downtrend resume for price objectives at 430-25 in the next few trading sessions.
Crude Oil extends losses as doubts raised over OPEC’s resolve to cut production
Crude Oil is also trading with a neutral-positive bias in intraday. MCX Crude is trading at 3609, down 12 points or 0.33%.
Crude Oil dropped recently after market participants raised concerns over OPEC’s resolve to extend production cuts beyond March 2018 when the cartel meet on November 30. This comes after Russia raised doubts that the OPEC has no concrete plan on how to reduce output and would possibly extend the decision into next year.
The recent uptrend in prices has been largely supported by falling US inventories along with OPEC’s increasing compliance to production quotas. The market fundamentals continue to remain supported but a short-term correction in prices is expected – we feel prices may decline to 3550-3500 and consolidate at lower ranges before further momentum for an upside can be built.
CommoditiesOnLine
