Market Update (Bullions)
Bullion counter may remain sideways with negative bias as gold prices eased on Tuesday as investors sought safety in the dollar from a long-drawn U.S.-China trade war and its impact on the global economic growth. Investors are now focussed on the new round of trade talks between China and the United States that started in Beijing on Monday. These talks come as the world’s two largest economies try to hammer out a deal before a March 1 deadline, after which U.S. tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25 percent from 10 percent. Gold can face resistance near 33200 while it has support near 32950. Silver can dip lower as it can test 39700 while facing resistance near 40100. Meanwhile, top four Democratic and Republican congressional negotiators on border security funding resumed talks on Monday, with the possibility of another partial U.S. government shutdown looming if they fail to reach a deal by a Friday deadline. China’s gold reserves were at 59.94 million fine troy ounce at end-January versus 59.56 million troy ounce at end-December, according to central bank data.
Market Update (Base Metals)
Base metals prices may trade lower on US China trade concerns. Chinese investors, returning on Monday after a week-long Lunar New Year holiday, seemed to focus more on downbeat news rather than optimism expressed by China about the new round of trade talks with the United States. Copper may test 435 while facing resistance near 442 in MCX. There was further pressure on copper prices after Chilean state miner Codelco said on Saturday it hoped to restart operations soon at its Chuquicamata copper mine. Zinc can dip lower towards 186. Lead can move sideways in range of 144-146. Nickel can dip further lower and can test 870. Aluminum prices may find some support near 132. London zinc lost more ground on Tuesday, falling for a third consecutive session to its lowest in more than two weeks on concerns over U.S.-China trade dispute and slowing global economic growth. U.S. and Chinese officials expressed hopes on Monday that a new round of talks would bring them closer to easing their seven-month trade war, but a U.S. Navy mission through the disputed South China Sea cast a shadow over the negotiations in Beijing.
Market Update (Energy)
Crude oil may open on firm note as oil prices edged up on Tuesday amid OPEC-led supply cuts and U.S. sanctions against Iran and Venezuela, although surging U.S. production and concerns over economic growth kept markets in check. Crude oil can test 3800 while taking support near 3700. Refining profits for gasoline have plunged since mid-2018, going negative in Asia and Europe, amid tepid demand growth and a surge in supply. The surge in U.S. crude oil production, which tends to be light in quality and which rose by more than 2 million barrels per day (bpd) last year to a record 11.9 million bpd EIA, had resulted in overproduction of gasoline. Natural gas can witness lower level buying as it can test 192 in MCX. U.S. natural gas futures jumped more than 2 percent on Monday as forecasts pointed to cooler than normal weather while investors covered short positions after prices settled at multiyear lows last week.
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