Gold, Crude Oil and Base Metals - July 10, 2023 - HDFC Securities

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


Gold prices resumed trading on a slightly negative note following an uptick in the US dollar. The US dollar strengthened on Monday after Chinese data showed deflation risks were accelerating.

The spot gold price at Comex trading lower by 0.06% at $1923 per ounce. The gold August future contract at MCX were trading down by 0.12% at Rs 58700 per 10 grams by noon session.

Market participants are now looking ahead to FOMC members speeches along with US consumer inflation data due Wednesday, which could offer further momentum in the dollar index and bullion pack. We believe that for this week, Comex Gold could move in a range of $1900 to $1960 with a moderately positive bias. MCX Gold August contact could move in the range of Rs. 58,120 to Rs. 59,560.

Crude oil prices retreated on Monday as traders took profits after prices gained more than 4.0% in the previous week. With the benchmark NYMEX WTI Crude oil trading down by 0.35% at $73.39 per barrel. In the previous week, crude oil prices surged to four-week highs on the back of supply concerns.

The oil market is finally starting to show signs of tightening after a series of supply cuts by OPEC and its alliance, led by Saudi Arabia. Additionally, an improvement in US demand during the summer driving season and news that the US is further purchasing 6 million more barrels of crude oil for the Strategic Petroleum Reserve favored the bulls.

We expect bullish momentum to continue in crude oil, and traders can adopt a buy-on-dip strategy this week. For a technical perspective, NYMEX WTI Crude Oil has successfully closed above its short-term price moving average of 50 DEMA, which is prevailing around $69.50. Until price holds above this level, the short-term trend remains bullish, and price can rally towards the $75.0 level. MCX Crude Oil June future have support at Rs 5865 and resistance at Rs 6280 for this week.

Base metals prices moved in a tight range amid a sluggish demand outlook from top metal consumer China and mixed global cues. Data revealed on Monday showed that China's factory gate deflation intensified in June, but consumer prices remained steady as a faltering post-COVID recovery impacted demand. There were also new indications that the country's property debt issue is still ongoing.

We believe copper prices will trade within a broader range of Rs 705 to Rs 729 with moderately positive bias. Despite a weak demand outlook, prices got support from lower global supply as stocks in LME-registered warehouses slipped to their lowest level since April. The zinc July contract is expected to move in a sideways to bearish trend with a range of Rs. 205 to Rs. 219 for this week.