Gold and Crude Oil - Aug 16, 2023 - HDFC Securities

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

Gold prices traded range-bound on Wednesday, with the spot gold price at Comex trading slightly up by 0.02% at $1905 per ounce. While the gold October future contract at MCX is trading lower by 0.17% at Rs 58870 per 10 grams.

Comex gold stuck near its lowest level since late June as investors are now awaiting the release of the minutes of the Federal Reserve's July meeting, due later today, which may reveal the central bank's willingness to raise interest rates. Meanwhile, Comex gold fell below the $1900/oz level on Tuesday on the back of stronger than expected US macro data and hawkish remarks from Fed members. Minneapolis Fed President Neel Kashkari said on Tuesday that while the U.S. central bank has made some progress in its inflation fight, interest rates may still need to go higher to finish the job.

We believe gold prices should consolidate in a lower range with a negative bias. Traders should adopt a sell-on-rally strategy. From a technical perspective, Comex gold is expected to trade in the range of $1895 to $1920. A break below the $1895 level opens the way further down for the target of $1880. The MCX Gold October contract is expected to move in the range of Rs. 58450 to Rs. 59080.

Crude oil edged down on Wednesday, with the benchmark NYMEX WTI crude oil trading down by 0.25% at $80.88 per barrel against the previous close. The price of crude oil corrected almost 4.0% from its recent peak on the back of growing concerns that China's faltering economy will erode oil demand in the world's biggest importer of crude. On the other side, strong US economic data, including retail sales, came in on the bright side, raising concerns among market players that the Fed might be forced to raise policy rates even more, which also weighed down on prices.

Traders' focus has now shifted towards today's US government crude oil inventory report. In the case of a larger than expected fall in crude oil inventories, a recovery in oil prices is expected from a support level. From a technical perspective, the WTI Crude has support at $78.80 and resistance at $82.0, while the MCX crude oil August contract has support at Rs. 6,620 and resistance at Rs. 6880 for the day.