Daily Metal and Energy Outlook 06th May
Bullions: Bullion counter may trade on sideways to upside bias as gold rose on Monday after U.S. President Donald Trump threatened to impose tariffs on Chinese goods, indicating a dramatic deterioration in Sino-U.S. trade talks and prompting a sharp downturn in riskier assets. United States President Donald Trump dramatically increased pressure on China to reach a trade deal by announcing on Sunday he would hike tariffs on $200 billion worth of Chinese goods this week and target hundreds of billions more soon. Gold is used as a safe-haven investment in times of geopolitical or global economic turmoil. Gold may recover towards 31780 while taking support near 31500 while Silver (July) can recover towards 37500 while taking support near 36800. Gold demand was robust in India and Singapore last week as a correction in prices ahead of a key gold-buying festival boosted purchases even as major centres like China and Japan were closed for most of the week due to holidays. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.63 percent to 740.82 tonnes on Friday from 745.52 tonnes on Thursday.
Base metals: Base metals prices may trade with weak bias as Shanghai base metals fell sharply on Monday, with copper and nickel declining more than 3 percent, as trade tensions between China and the United States escalated, just days after investors were upbeat about progress in the two countries’ trade talks. Trump tweeted on Sunday that he will raise U.S. tariffs on $200 billion worth of Chinese imports to 25 percent from 10 percent on Friday, and threatened to targets hundreds of billions of dollars more in trade. Trump’s comments stand in contrast to the recent positive signals emanating from both the U.S. and Chinese camps that progress to end the tit-for-tat tariff war was being made and a deal was within sight. It’s unlikely that China’s leaders will want to be seen to be caving in front of threats by a bullying U.S. president, but at the same time they are also keen to reach an agreement that will alleviate some of the pressure on their export-led manufacturing sector. Copper may test 424 while facing resistance near 435 in MCX. China’s steel futures dropped on Monday, the first trading day after a four-day national holiday, hit by worries over the outlook for trade after U.S. President Donald Trump said he would hike U.S. tariffs on $200 billion worth of Chinese goods. That came as the two countries had been working to reach a deal to end a months-long tit-for-tat trade war following rounds of negotiations among senior officials in the two governments. Zinc can test 216 while facing resistance near 225. Lead can trade in range of 128-132. Nickel may test 830 while facing resistance near 850. Aluminum prices may decline towards 144 while taking resistance near 148.
Energy: Crude oil may continue to extend losses as oil prices tumbled by more than 2 percent on Monday after U.S. President Donald Trump on Sunday said he would sharply hike tariffs on Chinese goods this week, risking derailing months of trade talks between the world’s two biggest economies. Trump on Sunday said on Twitter he would drastically hike U.S. tariffs on Chinese goods this week, pulling down global financial markets, including crude oil futures. Crude oil may dip towards 4160 while facing resistance near 4260 in MCX Within the oil industry, there are signs of a further rise in output from the United States, where crude production EIA has already surged by more than 2 million barrels per day (bpd) since early 2018, to a record 12.3 million bpd. That has made the United States the world’s biggest producer ahead of Russia and Saudi Arabia. The number of rigs drilling for gas in the United States fell by 3 to 183 in the week to May 3, while oil-directed drilling rigs rose by 2 to 807, data from oil services firm Baker Hughes showed on Friday. Natural gas may trade in range of 178- 183 in MCX.
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