Gold, Crude Oil and Base Metals - HDFC Securities - 26 June 2023

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

Gold prices advanced on Monday, with the spot gold price at Comex trading up by 0.35% at $1933 per ounce. Gold August future contract at MCX trading higher by 0.51% at Rs 58605 per 10 grams by noon.

Following an attempted mutiny by the Russian mercenary organization Wagner, geopolitical uncertainty grew, pushing gold prices slightly higher as investors moved towards safe-haven buying. Additionally, investors bet on gold after recessionary fears increased due to aggressive rate hikes by global central bankers and weak macro data (especially from Europe), which boosted safe-haven demand. Meanwhile, the dollar index retreated in today's session after having gained 0.65% in the previous week.

Going forward, this week, we expect the short-term trend of the precious metal to remain sideways to bearish, and market participants can adopt a sell-on-rise strategy. On the technical front, Comex gold is expected to move in the range of $1910 to $1950. If the price falls below the $1910 level, it could face downward pressure until the $1880 level. The MCX Gold August future has resistance at Rs 59370 and support at Rs 57470.

Crude oil prices erased earlier gains, with the benchmark NYMEX WTI crude oil trading down by 0.10% at $69.30 per barrel. Crude oil prices opened higher on Monday as investors considered the possibility of further unrest in Russia following the dramatic but brief uprising in the key OPEC+ producer over the weekend. Russia is a key producer in the OPEC+ coalition, along with Saudi Arabia, and any prolonged turmoil in the nation could reverberate through global oil markets. However, a lack of follow-up buying and demand concerns weighed on prices. Investors fretted that higher interest rates in the US and Europe would dampen oil demand despite evidence of tighter supply, such as falling US oil stocks.

Crude Oil expects to trade in a sideways to bearish trend this week amid weak fundamental cues. For the week, NYMEX WTI crude oil has strong resistance at $73.20 and key support at $66.70 per barrel. MCX Crude Oil July contract price will face trendline resistance around the 5900-5935 zone, and on the flip side, Rs 5520 acts as support.

Copper and other base metals traded marginally lower as concerns about demand growth grew. In the previous week, macroeconomic data from Europe marred investors' sentiment; the Manufacturing PMI in the Eurozone's economic powerhouse (Germany) came in at 41.0 in the month of June, against market expectations of 43.5. This score, the lowest since the early days of the epidemic, contributed to a larger-than-expected decrease in eurozone industrial output. Meanwhile, China's promising economic rebound has stalled, with weaker-than-expected consumption, manufacturing, and property market statistics for several months in a row. The recession and concerns about demand overshadowed any signals of supply-side constraints.

We expect market participants will keenly watch the Fed Powell speech on Wednesday and the Chinese PMI numbers on Friday, which could provide insight about China's economy. On the technical front, MCX Copper July contact will continue to trade in a sideways to bearish trend, with a range of 735-739 acting as resistance and 705-699 acting as an important support zone for this week.

Source : Equity Bulls

Keywords

Gold CrudeOil BaseMetals Commodities HDFCSecurities