Commodities Outlook: Precious Metals and Base Metals steady, Oil prices slightly lower
By Sam Nair
Precious Metals trade in red; focus on retail sales
Precious Metals have started the week on a weaker note with Gold futures at 1346.20, down 0.13% and Silver at 16.58, down 0.44%.
Bullions are trading lower but investor nervousness over Syria-Russia issue and trade war between the US-China should keep sentiment boosted and limit downsides this week. U.S., British and French forces pounded Syria with air strikes early on Saturday in response to a poison gas attack that killed dozens of people last week.
The US also prepared further sanctions on Russia as Putin warned on Sunday that further intervention would bring chaos to global affairs. Despite, the attacks, the chances of it being a one-off event has also kept prices from taking off much higher.
On the data front, the US Commerce Department is due to publish its report on retail sales at 6.00 pm today with consensus calling for a gain of 0.4% last month compared to a decline of 0.1% in February. Core sales may have increased 0.2% after the same increase a month earlier. Rising retail sales over time correlate with stronger economic growth and a positive report may pressure bullions in intraday.
Gold is trading in a narrow range of 31250-31150 in intraday and a breakout above the resistance could see prices rally to 31400-31500 whereas on the downside, a sustained close below the support could see prices fall further this week. Silver faces resistance at 39050 and a close above this level should carry prices significantly higher in the short term.
Base Metals trade steady; short-term bias remains negative
Base Metals are trading steady today with Aluminum adding another 2.37% to trade at 2335.0 currently whereas Nickel is at 14172.50, up almost two percent. Copper futures are at 6853.75, up one-third of a percent currently.
Base metals may experience some profit-taking in the days ahead as a result of continued trade tensions between the US and China, and elevated geopolitical tensions between the US and Russia, with the US due to announce fresh sanctions against Russia later today.
Aluminium, which rallied by 11% last week, is the most vulnerable to a bout of profit-taking unless the US sanctions continue to target Russian aluminium producers. Aluminium prices also gained further strength after Rio Tinto said it would declare force majeure on certain commitment in due to sanctions on its partner Rusal.
The intraday bias on base metals is neutral.
Oil prices consolidate near highs; rigs count increase
Crude Oil is consolidating near previous high but is down over a percent at 66.59 currently whereas Natural is slightly higher by 0.23% at 3.07 in intraday.
Crude Oil is being buoyed by western air strikes on Syria over the weekend despite Baker Hughes reporting an increase in oil drilling rigs.
The United States, France and Britain launched 105 missiles on Saturday, targeting what they said were three chemical weapons facilities in Syria in retaliation for a suspected poison gas attack in Douma on April 7. While this may be a once-off event, the potential to disrupt the already fragile situation in the Middle East should keep traders worried.
Baker Hughes reported that US companies added 7 rigs for the week ending April 13 bringing the total to 815 despite which prices have been moving higher supported by supply cuts from OPEC and Russia.
Technically, prices are holding above key resistance turned support at 66.0 and a daily close below this could see a sharp corrective move in prices in the short term whereas, on the upside, intraday resistance is seen at 67.70 today.
Sam Nair is AVP - Commodities with Stewart and Mackertich Wealth Management Limited
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