MCX MORNING UPDATE
BULLION – Bullion counter may trade with sideways bias as gold prices tread water on Tuesday, after a sharp fall in the previous session, as markets awaited the U.S. Federal Reserve rate decision, while optimism over a U.S.-China trade deal boosted demand for riskier assets. The Fed is scheduled to meet on Tuesday and Wednesday, where investors expect a reduction in borrowing costs for the third time this year. Federal fund futures imply that traders see a 92.5% chance for a 25 basis point rate cut by the U.S. central bank in its month-end monetary policy meeting. President Donald Trump said on Monday he expected to sign a significant part of a trade deal with China ahead of schedule but did not elaborate on the timing, building on optimism from last week when Washington said it was close to finalizing some parts of a trade deal. Both U.S. and China have imposed a series of tariffs over the past 15 months, stimulating global recessionary fears and driving gold prices over 16% higher this year. The European Union agreed to a Brexit delay of up to three months on Monday, as Prime Minister Boris Johnson said he would push on with his bid to end Britain political paralysis with an election on Dec. 12.
ENERGY- Oil prices edged lower in quiet trade on Tuesday as concerns about slower economic growth overshadowed signs of a thawing in the trade war between Washington and Beijing, while investors awaited U.S. inventory data. Prices rose sharply last week amid a decline in U.S. inventories and signs of an easing in the U.S.-China trade war, but worries on Monday about weaker economic growth offset hopes of a rise in oil demand even if trade talks progress. U.S. crude oil stockpiles at Cushing, Oklahoma, the delivery point for WTI, have risen by about 1.5 million barrels in the week through Oct. 25. U.S. President Donald Trump said earlier on Monday he expected to sign a significant part of the trade deal with China ahead of schedule but did not elaborate on the timing.
BASE METAL – Base metals may trade with mixed bias. U.S. and Chinese officials are close to finalising some parts of a trade agreement after high-level telephone discussions on Friday, the U.S. Trade Representative office and China Commerce Ministry said. Zinc prices climbed towards 4-month peaks on Monday as slumping stocks fuelled fears of shortages, while copper hovered near five-week highs on hopes of progress in trade talks between the United States and China. Zinc inventories in London Metal Exchange-registered warehouses are at 57,775 tonnes. They fell to 50,425 tonnes in April, the lowest since the 1990s. Also supporting prices are cancelled warrants – metal earmarked for delivery and so no longer available to the market – at nearly 43%.Global zinc demand is estimated at around 14 million tonnes this year. Some analysts expect an annual deficit of around 200,000 tonnes.
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