MCX MORNING UPDATE
Bullion counter can trade lower on profit booking at higher levels. Gold prices rose on Thursday as concerns of a slowdown in global growth due to a virus outbreak in China weakened risk appetite among investors. The first U.S. incident of person-to person spread of the new coronavirus was identified in Illinois, the U.S. Centers for Disease Control and Prevention said on Thursday. The flu-like virus, which originated in China and has spread to over 15 countries, has disrupted global travel and prompted several companies to suspend operations in China. Gold (Apr) can dip towards 40500 while taking resistance near 41000 while silver (Mar) can test 46100 while taking resistance near 46700. Fears of a hit to growth in the world’s second-largest economy triggered a sharp sell-off in financial markets, pushing investors toward safe havens like gold, the Japanese yen and the Swiss franc. Federal Reserve Chair Jerome Powell also noted the risks of a short-term slowdown in China, including to the U.S. economy, after the central bank’s widely expected decision on Wednesday to keep interest rates unchanged. U.S. Treasury yields dipped to three-month lows on Thursday and a closely watched part of the yield curve briefly inverted.
Crude oil may open on firm path as oil prices jumped on Friday following sharp losses this week, as the World Health Organization (WHO) came out against travel and trade restrictions in declaring a global emergency over the spread of the coronavirus that originated in China last year. Oil prices had fallen nearly 4% through Thursday this week – hitting three-month lows – before rebounding on Friday, with investors and traders worried over how the spreading virus would impact demand for oil and its products. Prices were also buoyed by reports that Saudi Arabia has opened a discussion about moving an upcoming output policy meeting to early February from March following the recent slide in oil prices. No final decision over the new date of the meeting has been made, and not all OPEC members are on board yet, with Iran a possible contender to oppose the move, OPEC wants to extend current oil output cuts until at least June from March, with the possibility of deeper reductions on the table if oil demand in China is significantly impacted by the spread of the coronavirus.
BASE METAL –
Base metals may trade with weak bias. Chinese markets are closed due to Lunar Year holidays. Copper may witness lower level buying as it can test 432 while taking support near 425. Copper prices sank to five-month lows on Thursday as funds sold on expectations of slowing demand in top consumer China, where a coronavirus outbreak has raised the prospect of an economic slowdown. China’s National Health Commission said the total number of deaths from the coronavirus in China climbed to 170 by late Wednesday while the number of those infected rose to 7,711. The epidemic could slow Chinese growth to 5% or even lower, a government economist said, as authorities extended Lunar New Year holidays and urged staff to stay home.
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