MCX MORNING UPDATE
Bullion counter may witness strong upside momentum on safe haven demand amid Middle East tensions. Gold, a classic haven asset, has jumped to four-month highs with the US and Iran moving closer to open confrontation in Iraq. The US launched an airstrike on Baghdad airport on Friday, killing Iran’s most celebrated military official Qassem Soleimani. The missile attack confirmed by Iranian and US officials also killed Abu Mahdi al-Muhandis, the deputy commander of Iran-backed militias. The US move has come following Iranian militias’ attempt to storm the American embassy on Tuesday and has brought the two nations closer to a direct confrontation.
Crude oil may remain on higher side as oil prices jumped more than $1 on Friday after a U.S. air strike killed key Iranian and Iraqi military personnel, raising concerns that escalating Middle East tensions may disrupt oil supplies. The supply side risks remain elevated in the Middle East and we could see tensions continue to elevate between the U.S. and Iran-backed militia in Iraq. An air strike at the Baghdad International Airport early on Friday killed Iranian Major-General Qassem Soleimani, head of the elite Quds Force, and Iraqi militia commander Abu Mahdi al-Muhandis, an Iraqi militia. Natural gas futures fell on Thursday to their lowest level in over four-months, weighed down by forecasts for the weather to moderate over the next two weeks as production nears record highs.
BASE METAL –
Base metals may trade with sideways bias. Copper prices rose towards eight-month highs on Thursday as demand expectations were boosted by economic measures in China and optimism that the world’s top metals consumer would also sign a preliminary trade deal with the United States. Z Shanghai aluminium prices fell in early trade on Friday, having hit a more than two-week low under 14,000 yuan ($2,009.96) a tonne overnight on signs that stocks in top consumer China were rising again after a protracted drop over 2019. Chinese supply, meanwhile, continues to rise, with Henan Shenhuo Group putting its new smelter in Yunnan into production on Dec. 31.
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