Precious Metals Preview:
Gold slipped in the US trades as profit selling returned. COMEX Gold managed to rise steadily earlier, recovering from a near three week low as currency market volatility returned to support the metal. COMEX Gold failed to sustain higher though as traders eyed US interest rates amid rising yields. Rising rates could keep Gold under check over coming quarters. The US 10 year benchmark treasury yield help near one year high of 1.15%. This pulled Gold lower by around 1% in intraday moves. However, yet again good buying emerged in dips and the metal currently trades at $1959 per ounce, up 0.82% on the day. MCX Gold futures flipped back from a high of Rs 49570 per 10 grams and ended at Rs 49080 per 10 grams, down 0.53% on the day.
The US Energy Information Administration or EIA released its first Short-Term Energy Outlook (STEO) for the year 2021. The January STEO remains subject to heightened levels of uncertainty because responses to COVID-19 continue to evolve. Reduced economic activity and changes to consumer behavior in response to the COVID-19 pandemic caused energy demand and supply to decline in 2020. The ongoing pandemic and the success of vaccination programs will continue to affect energy use in the future. After falling by 3.5% in 2020, IHS Markit forecasts that US real gross domestic product (GDP) will increase by 4.2% in 2021 and 3.8% in 2022. Rising GDP contributes to EIA’s forecast of rising total energy use in the United States during 2021 and 2022. After falling by 7.8% in 2020, EIA forecasts that total US energy consumption will rise by 2.6% in 2021 and by 2.5% in 2022, reaching 97.3 quadrillion British thermal units (quads), 3.0 quads less than in 2019. EIA forecasts Brent crude oil spot prices to average $53 per barrel (b) in both 2021 and 2022 compared with an average of $42/b in 2020.
Base Metals Preview:
COMEX Copper futures were well supported though economic cues were mixed. US stocks also saw a choppy movement but sentiment was largely supported as investors eyed the earnings season. COMEX Copper saw some good buying though, adding nearly 2% yesterday following a tumble of 3% on Monday. MCX Copper ended up 1% at Rs 611 per kg. The US NFIB Small Business Optimism Index came in at 95.9 in December, 5.5 percentage points less than in November. The reading stands below the historical 47-year average of 98 points for the first time since May.
Germany’s economy is set to expand this year on the back of export growth, but the biggest euro area economy will reach pre-crisis level only in the first half of next year, Federation of German Industries said Tuesday. The industry body predicted 3.5% growth for the German economy this year after GDP shrank around 5% in 2020. UK total retail sales decreased 0.3% in 2020, the worst annual change since records began in 1995 due to the Covid-19 pandemic, data released by the British Retail Consortium, or BRC, showed Tuesday.
Japan posted a current account surplus of 1,878.4 billion yen in November, the Ministry of Finance said on Tuesday, down from 2,144.7 billion yen in October. Exports were down 3.4% on year to 6.039 trillion yen, while imports sank an annual 13.6% to 5.423 trillion yen. The trade balance showed a surplus of 616.1 billion yen. A measure of the public assessment of the Japanese economy dropped for the second month in a row in December, survey data from the Cabinet Office showed on Tuesday. The current conditions index of the Economy Watchers’ Survey decreased to 35.5 in December from 45.6 in November.
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