MCX MORNING UPDATE
Bullion counter can some profit booking at higher levels. Gold prices edged up recently as rising concerns over the new coronavirus and its impact on global growth outweighed encouraging U.S. economic data and drove purchases of the metal. An advance team of international experts led by the World Health Organization has left for Beijing to help investigate China’s coronavirus epidemic, which has claimed more than 900 lives in mainland China, surpassing the death toll from the SARS epidemic. The U.S. Federal Reserve said that the U.S. economy slowed last year on weak global growth, but key risks have receded and the likelihood of recession has declined, although it recognised possible risk of an economic downturn due to the fallout from the coronavirus outbreak. Hedge funds and money managers cut their bullish positions in COMEX gold contracts in the week to Feb. 4. U.S. President Donald Trump will propose on Monday a 21% cut in foreign aid and slashes to social safety net programs in his $4.8 trillion budget proposal for fiscal 2021.
Crude oil may remain on weaker path as oil prices on Monday extended their decline from an early January peak above $70 as the spectre of excess supplies loomed over the market after the spreading coronavirus outbreak hit demand in China, the world’s largest oil importer. Worries over supply were not alleviated on Friday when Russia said it need more time to decide on a recommendation from a technical committee that has advised the Organization of the Petroleum Exporting Countries (OPEC) and its allies to cut production by a further 600,000 barrels per day. Russia Energy Minister Alexander Novak said Moscow needed more time to assess the situation, adding that U.S. crude production growth would slow and global demand was still solid. The proposal for the further cuts “failed to alleviate the pressure on oil, in part because the proposal has yet to be formally discussed by OPEC ministers and because Russia continues to push back against further cuts. Crude oil can test 3560 while taking resistance near 3640. Natural gas can dip towards 125 while taking resistance near 133. U.S. natural gas futures on Friday held near a four-year low as falling global liquefied natural gas (LNG) prices offset forecasts for colder weather and higher heating demand in the United States in mid- to late-February.
BASE METAL –
Base metals may trade with mixed bias. S&P Global Ratings cut its Chinese 2020 growth forecast to 5%, down from 5.7% on Friday, saying the impact of the coronavirus outbreak could take a heavy short-term toll. Copper may dip lower and can test 429 while taking resistance near 436. Copper prices fell on Friday on concerns that a rising death toll from the coronavirus in China could lead to a bigger hit to economic activity and metals’ demand. However, prices ended the week 1.8% higher, marking the first weekly gain in three on hopes for a cure for the virus. Nonferrous metal output in China will fall at least 10% in February but operations are expected to normalise after the second quarter, the country’s metal association said.
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