Bullions
Gold prices were little changed in North American trade on
Tuesday, holding near a one-month low, as investors moved to the sidelines
before the start of the Federal Reserve's two-day monetary policy meeting later
in the day.
While the Fed is not expected to take action on interest rates at
the conclusion of its meeting on Wednesday, market players will scrutinize its
policy statement for fresh hints on the timing of interest rate hikes over the
next several months.
A recent string of better than expected U.S. data
reignited speculation that the Fed will raise interest rates before the end of
the year. Fed funds futures are currently pricing in a 52% chance of a rate
hike by December, compared with less than 10% at the start of this month.
Gold
is sensitive to moves in U.S. rates, as a rise would lift the opportunity cost
of holding non-yielding assets such as bullion. Gold is up almost 25% for the
year to date, boosted by concerns over global growth and expectations of
monetary stimulus.
Expectations of monetary stimulus tend to benefit gold, as
the metal is seen as a safe store of value and inflation hedge. Prices
surged to a more than two-year high of $1,377.50 earlier in July, as concerns
surrounding global growth in wake of Britain’s vote to exit the European Union
sent investors flooding into safe haven assets.
Energy
Oil prices added to overnight losses in North American trade on Tuesday, as
market players looked ahead to fresh weekly information on U.S. stockpiles of crude
and refined products.
The American Petroleum Institute will release its inventories report later in
the day, while Wednesday’s government report could show crude stockpiles fell
by 2.5 million barrels in the week ended July 22. Gasoline inventories are
expected to increase by 675,000 barrels while stocks of distillates, which
include heating oil and diesel, are forecast to rise by 700,000 barrels,
according to analysts. According to oilfield services provider Baker Hughes,
the number of rigs drilling for oil in the U.S. last week increased by 14 to
371, the fourth straight weekly rise and the seventh increase in eight weeks.
The renewed gain in U.S. drilling activity fueled speculation that domestic
production could be on the verge of rebounding in the weeks ahead, underlining
worries over a supply glut. Concerns over a rising gasoline inventories further
weighed. Despite being in the midst of the peak summer-driving season in the
U.S., gasoline stocks are well above the upper limit of the average range,
according to the EIA.
Base Metals
Base metals were all in negative territory on Tuesday morning on the LME, with
copper and nickel falling to two-week lows ahead of key central bank meetings
this week. Markets have turned warier ahead of meetings of the US Federal Reserve
and the Bank of Japan this week, National Australia Bank said. The US Fed
meeting starts tomorrow – rates are largely expected to stay unchanged but the
meeting will be closely watched for more clues for direction, market
participants noted. On Friday, the Bank of Japan (BoJ) is expected to roll out
fresh stimulus measures but investors are starting to fear it could
under-deliver. In data, Japan’s services PPI increased 0.2 percent. Today’s US
data includes the S&P.CS composite-20 house price index, flash services
PMI, consumer confidence, new home sales and Richmond manufacturing PMI. The
dollar index has slipped to 96.88 from a high of 97.57 yesterday while oil
prices fell to multi-month lows this morning. Spot Brent crude hit a new
two-and-half-month low of $44.5 per barrel, which is weighing on the metals. In
the metals, copper fell to its lowest in around two weeks – it was last at
$4,882 per tonne, down $7 on Monday’s close. Fewer than 4,000 lots have changed
hands on Select so far as summer conditions take their toll on trade interest.
Stocks fell a net 7,625 tonnes to 213,725 tonnes. Aluminium edged $1 lower to
$1,604. Stocks continued to climb, up 4,975 tonnes to 2,324,125 tonnes, while
cancelled warrants fell 9,025 tonnes to 925,500 tonnes. Nickel fell to a
two-week low of $10,230 this morning despite news that the Philippines is
considering a mineral ore export ban, following the lead of Indonesia, which
introduced a similar ban in January 2014. Nickel recently traded at $10,285,
down $217, after stocks edged six tonnes higher to 373,614 tonnes. Zinc fell to
a one-week low – it was last at $2,225, down $24. Stocks fell 200 tonnes to
436,600 tonnes. Lead is also around its lowest in one week – it recently traded
at $1,839, down $4, with stocks down 125 tonnes at 187,225 tonnes.
On Agri side, Government has asked the states to remove all local taxes on
essential food items, like pulses and edible oils, among other steps to ensure
supplies at affordable prices. “In order to ensure adequate availability of
pulses, edible oils and other essential food items at reasonable prices, the
Center has urged the States to remove all local taxes on essential food items,”
Ministry of Consumer Affairs, Food and Public Distribution said in a statement.
According to statement, in a letter written to Chief Secretaries of the states,
Consumer Affairs Secretary Hem Pande asked the states to take up the market
intervention on a real time basis and to review APMC Acts on priority to delist
pulses and other essential food items so that farmers can sell their produce at
any place of their choice, minimizing stages of supply chain from farm gate to
ultimate consumers. Sugar prices have gained 1,000 a tonne to 35,000 in
July on the back of a supply deficit in the market due to export of 1.6 million
tonnes (mt) and an 11 per cent decline in domestic sugar production to 25.2 mt
in the sugar season ending September. The Centre has imposed an export duty of
20 per cent to curb exports and improve supply in domestic markets. Sabyasachi
Majumdar, Senior Vice-President, ICRA, said prices would remain firm for
three-four quarters given that sugar production is likely to decline further to
23-24 mt in SY2017 (October-September) because of a decline in the availability
of cane in Maharashtra and Karnataka. Although the monsoon is likely to be
better during the current year, he said, its impact on output is likely to be
seen only in SY2018. According to the Agriculture Ministry, cane acreage as on
July 22 stood at 45.41 lakh hectares (lh), lower than corresponding last year’s
47.40 lh on reduced planting mainly in the key State of Maharashtra. Also other
States such as Tamil Nadu, Gujarat and Madhya Pradesh have reported a lower
acreage this year. In the international market, unfavourable weather conditions
have hit sugar production in recent months across major suppliers, leading to
expectations of a fall in output. (Source: HBL)
India has imported over 7 lakh tonnes of pulses during April-May of this fiscal
to meet domestic demand, Parliament was informed on Tuesday. In a written reply
to Lok Sabha, Food Minister Ram Vilas Paswan said the country has imported
7,05,477 tonnes of pulses in the first two months of 2016-17 fiscal. India had
imported 57.97 lakh tonnes of pulses during the entire 2015-16 fiscal, the data
showed. In reply to another query, Paswan said: "The production of pulses
varies in the range of 17-19.5 million tonnes while demand for 2016-17 is
estimated at 24.61 million tonnes." The deficit in domestic supply is met
through imports primarily under private trade, he added. (Source: BS)
Technical Levels
Gold
Support at 30600---30450 and Resistance at 31000---31150
Intraday... Break and sustain below 30740 will take to 30660---30620 and then
to 30450 mark. More and more downside panic will see only close below 30450
else it could test its resistance level of 31000---31150 again
Further upside rally will see only close above 31150 mark
Trade with levels only
Silver
Support at 45800---45500 and Resistance at 47000
Either side break or close with volume will decide further. Till then traders
can
trade in a range with strict stop loss and wait for confirmation
Trade with levels only
Crude oil
We are holding short from 3000 level. Clearly indicate to sell
below 3000 for the downside target of 2880---2820. It made a low of 2875 and
now trading around 2885
Now what to expect???
Support at 2860 and Resistance at 2935
Close below 2860 will take to 2820---2780. Further downside panic will see only
close below 2780 mark else it could its resistance level of 2935 again
Trade with levels only
Copper
Support at 329 and Resistance at 334---340
Either side break or close with volume will decide further. Till then traders
can trade in a range with strict stop loss and wait for confirmation
Today's Data and Event
Britain Prelim GDP q/q - 02: 00 P.M
U.S Core Durable Goods Orders m/m – 06:00 P.M
U.S Durable Goods Orders m/m – 06:00 P.M
U.S Pending Home Sales m/m – 07:30 P.M
U.S Crude Oil Inventories – 08:00 P.M
U.S FOMC Statement – 11:30 P.M
U.S Federal Funds Rate – 11:30 P.M
