Gold, Crude Oil and Base Metals - June 12, 2023 - HDFC Securities

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

Gold prices traded slightly up on Monday, with the spot gold price at Comex was trading higher by 0.10% at $1964 per ounce. Gold August future contract at MCX were trading up by 0.04% at Rs 59845 per 10 grams by noon session.

Comex spot gold prices hovered within a narrow range after gaining nearly 0.70% in the previous week. Investors are avoiding fresh buying and remain cautious before the outcome of key macro data from the US. Market players will pay close attention to tomorrow's US consumer inflation data as it offers additional context for the Federal Reserve's upcoming interest rate decisions. While most awaited the outcome of the Federal Reserve policy meeting on June 14, an important trigger for precious metals. Meanwhile, investors continue to trim their holdings of yellow metals. Gold ETFs cut 4,402 troy ounces of gold from their holdings in the last trading session. This was the ninth straight day of declines and the longest losing streak since March 7. On the technical front, we believe, looking at the daily time frame, that Comex Gold could hold bullishness until it trades above $1930 per ounce. For the time being, $1995 to $2017 per ounce remain the major supply areas. Overall, a weekly range could be expected for Comex gold between $2017 - $1930. MCX Gold August future has support at Rs 59275 and resistance at Rs 60750.

Crude oil prices extended their fall with the benchmark NYMEX WTI Crude oil was trading down by 2.80% at $68.25 per barrel on Monday. Even after Saudi Arabia's unilateral vow to reduce output, the price of oil fell for the last week as concerns about demand still dominated the market outlook. On the supply side, despite of Saudi Arabia's pledges to cut oil production four times in the past year, steady Russian supply has kept the market ample supply. Russian oil exports to Asian countries (China and India) have grown despite the implementation of the European Union's embargo.

We expect crude oil prices to remain in a sideways to bearish zone over mixed fundamentals. For the week, NYMEX WTI crude oil is likely to trade in the range of $66.70 to $71.80 per barrel. MCX Crude Oil June future have support at Rs 5570 and resistance at Rs 6040 for this week.

Most of base metal prices ended with gains in the previous week due to an improved demand outlook after a top metal consumer, China, rolled out serious of measures to boost its economy, while a softer dollar also provided some support. Across the base metal pack, zinc has outperformed to other base metals; its price surged more than 4.0% in the previous week. While copper registered a second weekly rise but at a moderate pace.

Looking forward, the short-term outlook turns moderately bullish in base metals as stimulus hopes in China and recent data show strong growth in Chinese automobile sectors, which consume base metals. MCX Copper June Futures have a strong supply zone around 735-744 levels, and on the flip side, support is expected at the 712-705 levels. While MCX Zinc is expected to trade within the range of 219 to 207.