MCX MORNING UPDATE
BULLION – Bullion counter may trade with upside bias as gold rose to a fresh two-week high on Friday, as weak U.S. economic data spurred expectations for another interest rate cut by the Federal Reserve later this month. New orders for key U.S.-made capital goods fell more than expected in September and shipments also declined, a sign that business investment remains soft amid the fallout from the U.S.-China trade war but other data on Thursday showed the spat has yet to have much effect on the overall jobs market. The U.S. Federal Reserve has cut interest rates twice this year and investors currently see another reduction in borrowing costs when policymakers meet next week as the economy struggles with the headwinds from a long-drawn U.S.-China trade war and slowing global growth. Federal fund futures imply that traders see a 90.4% chance for a 25 basis point rate cut by the U.S. central bank in its month-end monetary policy meeting.
ENERGY – Oil prices stepped back on Friday after three straight days of gains, hurt by renewed concerns about fuel demand in light of gloomy economic growth forecasts. The strong weekly rise in oil prices was underpinned by a surprise decline in U.S. inventories of crude and optimism about more efforts to support prices by OPEC and its allies. Adding further support to prices this week were comments by officials of the Organization of the Petroleum Exporting Countries (OPEC) that extended supply curbs are an option to offset the weaker demand outlook for OPEC crude in 2020. Saudi Arabia, OPEC de facto leader, wants to focus first on boosting adherence to the group production-reduction pact with Russia and other non-members, an alliance known as OPEC+, before committing to more cuts.
BASE METAL – Base metals may trade with mixed bias. The International Copper Study Group (ICSG) has taken the red ink to both sides of this year’s copper market balance equation. Nickel plant in Indonesia would start operation ahead of schedule in the first half of 2020, and it reiterated production targets for this year. United Company Rusal on Friday reported only a small rise in third-quarter aluminum sales from the previous quarter, pressured by a weaker market for the metal. Aluminum sales for the three months to Sept. 30 rose 0.8% on the quarter to 1.1 million tonnes, while production was up 0.4%, at 942,000 tonnes.
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