MCX MORNING UPDATE
Bullion counter can remain on firm path as gold prices held steady above the key $1,600 mark on Wednesday as an uptick in equities due to a drop in new virus cases was kept in check by fears about the economic fallout of the epidemic. The big wave of risk-off has sort of dissipated right now, but still the economic fallout is buttressing the demand for gold. Gold can move towards 41600 while taking support near 41200 while silver can improve towards 47600 while taking support near 47000. The increase in the number of new virus cases slowed in China’s Hubei province even as the death toll rose by 132 as of Tuesday. Investors will closely read the minutes of the Federal Reserve’s Jan. 28-29 policy meeting, which is due at 1900 GMT. Lower interest rates reduce the opportunity cost of holding non-yielding bullion and also weigh on the U.S. currency. Indicative of investor sentiment, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust rose 0.6% to 929.84 tonnes on Tuesday, their highest since Nov. 11, 2016.
Crude oil may remain on firm path as oil prices were slightly higher on Wednesday with gains limited by the widening economic impact from the coronavirus epidemic that started in China, although new confirmed cases fell for a second day in the province at the centre of the outbreak. China is struggling to get manufacturing back on line in the world’s second-largest economy after imposing stringent city-wide lockdowns and travel restrictions in efforts to contain the virus. Official data showed new cases in Hubei province fell for a second straight day, although the number of deaths increased, and the World Health Organization earlier cautioned there was not enough data to know if the epidemic was being contained. U.S. shale oil output is expected to rise by about 18,000 barrels per day (bpd) in March to a record 9.18 million bpd, driven by gains in the Permian Basin, data from the U.S. Energy Information Administration showed on Tuesday. Crude oil can improve towards 3800 while taking support near 3730. Natural gas can bounce back towards 143 while taking support near 135. U.S. natural gas futures jumped over 7% on Tuesday to the highest in more than a month, as weather forecasts projected the temperature to be cooler than previously expected. Meteorologists projected weather in the Lower 48 U.S. states will turn colder than normal during Feb. 19-21 and Feb. 27 – March 4. That is colder than Sunday’s outlook.
BASE METAL –
Base metals may trade with positive bias. Copper prices edged up on Wednesday as concerns around the coronavirus eased after daily new infections dipped for a second straight day. China’s National Health Commission reported 1,749 new confirmed cases of coronavirus infections, the lowest daily rise since Jan. 29. The death toll, however, passed 2,000.China’s imports of refined copper are likely to slide for a second year running in 2020 while the country’s aluminium consumption will dip slightly after a rare fall in 2019, projections by research house Antaike showed on Tuesday. Refined copper imports are forecast at 3.1 million tonnes in 2020, He Xiaohui, a copper analyst at the China Nonferrous Metals Industry Association’s Antaike research arm said during a webinar.
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