Aug 10, 2016 - report on U.S. productivity on Tuesday suggested the economy may not ... Trade group American Petroleum I
Fundamental Report 10th Aug 2016 Bullion – On Tuesday, spot gold prices rose by 0.39% to close at $1340.3 per ounce as the dollar slipped lower against a basket of currencies and concerns over the global economic outlook trumped some expectations that the U.S. Federal Reserve could raise interest rates this year. Gold slipped to its lowest level in a week on Monday, under pressure after forecast-beating U.S. non-farm payrolls employment data on Friday revived speculation that the Fed could press ahead with a rate hike. A weak report on U.S. productivity on Tuesday suggested the economy may not be growing as quickly as anticipated. Fed policymaker Jerome Powell was quoted as saying on Monday that the U.S. economy is at increasing risk of becoming trapped in a prolonged phase of slow growth that points to a need for lower interest rates than previously expected. On the MCX, gold prices rose by 0.3% on Tuesday to close at Rs.31273 per 10 gms. Spot silver prices rose by 0.6 percent on Tuesday to close at $19.8 per ounce as weak dollar index acted as a positive factor. On the MCX, silver prices rose by 0.18% to close at Rs.46372 per kg
Outlook On an intraday basis we expect gold prices to trade higher as comments from Fed policy maker Jerome Powell said that the economy is at the increasing risk of slowing down and the rate hike will be delayed than the market expectations.
Energy – WTI oil prices declined by 0.6% to close at $42.8 per barrel extending losses in post-settlement trade after preliminary data showed a surprise U.S. crude stockpile build last week, heightening worries about a global petroleum glut. The market also lost the previous day's upward momentum as speculation fizzled that the Organization of the Petroleum Exporting Countries and other oil producers would embark on another round of talks on price cooperation after their failed effort in April. Trade group American Petroleum Institute (API) reported U.S. crude stockpiles rose by 2.1 million barrels during the week to Aug. 5. Analysts polled by Reuters had expected a 1 million-barrel drawdown instead. The U.S. Energy Information Administration will issue official inventory data on Wednesday (EIA). EIA Inventory Forecast - U.S. commercial crude oil inventories likely declined last week, after rising unexpectedly for two consecutive weeks, an extended Reuter’s poll showed on Tuesday. The U.S. Department of Energy's Energy Information Administration (EIA) estimated, on average, that crude stocks declined 1.0 million barrels in the week ended Aug. 5. Stockpiles of gasoline were forecast to have decreased 1.1 million barrels last week, while distillate inventories, which include heating oil and diesel fuel, were forecast to have risen about 500,000 barrels.
Outlook Global oil market continues to be clouded from extra supplies from OPEC as well as Non-OPEC nations. Besides, crude inventories in the US market also remain very high at around 519 million barrels which will also act as a negative factor for oil.
Base Metals – LME base metals traded mixed yesterday as rising risk appetite after strong NFP data from the US eased some global growth concerns. While on the other hand, weak summer demand in China acted as a negative factor. MCX base metals traded mixed in line with international trends. LME Copper prices fell by 0.6% on Tuesday to close at $4779/ton as Chinese PPI improved further to -1.7% in July, adding to views that the Peoples’ Bank of China may not hurry to cut interest rates soon. Also, China's copper imports fell 14 percent to 360,000 tons in July from the previous month. Overall, China's imports fell 12.5 per cent from a year earlier in July and exports fell 4.4 per cent, pointing to further economic weakness Some support was provided as market sentiments were positive as Nonfarm payrolls in the U.S. rose by a seasonally adjusted 255,000 in July, much higher than expected, reviving hopes of macro economic recovery. MCX copper prices traded lower by 0.8% yesterday to close at Rs.318.2 per kg.
Outlook LME Copper is currently trading higher by 0.3% at $4792/ton. Prices are likely to change its momentum to lower today as Chinese PPI data has reduced the bets of China cutting its rates soon. Along with that, weak seasonal demand from China will continue to exert pressure. However, Bank of England policymaker Ian McCafferty said the central bank will probably have to loosen monetary policy further if the UK's economy worsens.
ECONOMICAL DATA Indicator JOLTS Job Openings Crude Oil Inventories
Country US US
Time (IST) 7:30pm 8:00pm
Forecast 5.52M -
Previous 5.50M -
Impact Medium High
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