Gold, Crude Oil and Base Metals - April 3, 2023 - HDFC Securities

By Mr. Saumil Gandhi, Senior Analyst - Commodities, HDFC Securities.

Gold prices edged lower on Monday, with spot gold prices at Comex were trading down by 0.29% at $1963 per ounce. Gold June future contract at MCX were trading down by 0.13% at Rs 59540 per 10 grams by noon session.

Gold prices started week with negative bias as pullback in US Dollar on back of reignite fears over inflation resurfaced after a surprise announcement by OPEC and its alliance to cut oil production further, with traders wagering the Federal Reserve may need to increase interest rates at its next meeting. Dollar index was up by 0.19% at 102.39 in Asian trading hours. While US Bond yields recovered from losses and settled higher last week and expectation of further gain in bond yields added pressure in yellow metal. Technically Comex Spot gold prices consolidated in broader range of $1950 to $2005 per ounce last few sessions and we expect the same trend will continue in short term over mixed sentiment. For the week Comex spot gold having supports at $ 1935/1917 per ounce and resistance at $2010/$2027 per ounce. MCX Gold June future having support at Rs 58580 per 10 gram and resistance at Rs 60400 per 10 grams.

Crude Oil prices rallied with benchmark NYMEX WTI crude oil were trading higher by 5.70% at $80.0 per barrel on Monday. Crude oil prices surged over 7.0% earlier Monday morning after unexpected output cut announced by OPEC and its alliance over the weekend. OPEC and its alliance announced it was cut oil output by 1.16 million barrel per day. That means that oil markets may potentially see around 1 percent of global oil supply or more being curtailed from May. The change comes before a virtual meeting of an OPEC and its alliance ministerial panel, which includes Saudi Arabia and Russia.

We expect Crude oil prices can rally further after change in supply equilibrium with NYMEX WTI crude oil likely to retest $82.0 per barrel if price cross this level, then it will rally towards $87 per barrel. NYMEX WTI Crude oil prices face resistances at $82.0/$87.0per barrel and find supports at $75.0 per barrel. MCX Crude Oil April future having supports at Rs 6240 and resistances at Rs 6780 for this week.

Base Metals prices traded sideway to negative on Monday as weaker than expected China's factory activity growth fanned demand concerns, and pull back in U.S. dollar over renewed inflation fears.

Copper price traded lower on Monday as sentiment was hurt after data from China indicated slowdown in production in month of March, The Caixin manufacturing PMI fell to 50.0 in March against expectation of 51.7. Also, pullback in dollar index weighed on base metal prices. Dollar index started the week higher, as fears over inflation resurfaced after a surprise announcement by major oil producers to cut production further, with traders wagering the Federal Reserve may need to increase interest rates at its next meeting.

We expect base metals prices likely to face correction in short term however Investors focus will be on this week Manufacturing PMI data from US, Europe and China which could provide further direction. MCX Copper April future likely to trade within natural range of 757 to 784. Having strong supports at Rs 770/757 per kg and resistances place at Rs 787/795 per kg for the week.