Aug 1, 2016 - Information Administration (EIA) said crude stockpiles soared 1.7 million barrels last week, instead of fa
Fundamental Report 1st Aug 2016 Gist of Report Gold - Gold prices to get a boost post BOJ monetary stimulus. Crude Oil - Global supply glut a cause of concern for oil markets. Copper - Top Chinese official pledge to do whatever it takes to boost growth in the economy.
Bullion – Last week spot gold prices rose by 2.2% to close at $1350.6 per ounce. The U.S. Federal Reserve left interest rates unchanged as expected and the dollar pared gains against a basket of major currencies. The U.S. central bank said in a statement following its two-day meeting those near-term risks to the U.S. economic outlook had diminished, opening the door to a resumption of monetary policy tightening this year. Prices remained range bound at the start of a two-day U.S. Federal Reserve policy meeting which is being closely watched for clues on the outlook for U.S. interest rates. The dollar slid as much as 0.5% against a currency basket, largely due to a bounce in the yen after traders dialed back expectations for how much new stimulus Japanese authorities would inject into an ailing economy. The world's major economies pledged at a G20 meeting over the weekend, dominated by Britain's vote last month to leave the European Union, to use all policy tools available to boost growth. That lifted both shares and the dollar earlier in the session. On the MCX, gold prices declined by 2.2% to close at Rs.31549 per 10 gms last week. Spot silver prices fell by 0.9% on Thursday to close at $20.1 per ounce. The fall in silver prices is in line with decline in gold prices. However, weakness in dollar index along with positive base metals restricted sharp negative movement. On the MCX, silver prices rose by 0.7% to close at Rs.47362 per kg.
Outlook On an intraday basis, we expect gold prices to trade higher as Asian stocks declined after Bank of Japan expanded its purchases of exchange-traded funds and doubled the size of a U.S. dollar lending program while keeping government-bond purchases unchanged.
Energy – WTI oil prices declined by 2.3% last Wednesday to close at $41.9 per barrel with U.S. crude futures hitting three-month lows, as U.S. crude and gasoline stocks surged on weak demand during the peak summer driving season. The U.S. Energy Information Administration (EIA) said crude stockpiles soared 1.7 million barrels last week, instead of falling 2.3 million barrels as forecast. Gasoline inventories rose 452,000 barrels, compared with analysts' expectations for a 40,000-barrel increase. Oil extended losses as the dollar rallied after the Federal Reserve left interest rates unchanged while citing diminished near-term risks to the U.S. economic outlook that meant a potential rate hike later this year. Trade group American Petroleum Institute (API) said after the market's settlement that U.S. crude stockpiles fell by 827,000 barrels last week, compared with analysts' expectations for a drawdown of 2.3 million barrels. Official inventory data for the week ended July 22 is due on Wednesday from the U.S. Energy Information Administration (EIA). On the MCX, oil prices declined by 6% to close at Rs.2782 per barrel last week.
Outlook On an intraday basis, we expect oil prices to trade lower as the supply glut in oil market continues to bother investor sentiment while the surprising report from the EIA about build up in crude inventories after nine weeks of withdrawal needs a close watch.
Base Metals – LME base metals traded mixed as the Federal Reserve maintained status quo in the latest FOMC meeting. While on the other hand, Bank of Japan fell short of expectations of stimulus measures. MCX base metals traded mixed in line with international trends. LME Copper prices traded flat to close at $4920/ton, as the Bank of Japan refrained from expanding the government bond purchases while it doubled its ETF purchases to 6 trillion yen. The markets were widely expecting aggressive easing measures. Along with this, the Federal Open Market Committee kept its overnight interest rate target in the 0.25 percent to 0.5% range although it acknowledged a sharp improvement in the labor market. As a result of Fed and BoJ actions, DX fell be more than 2 percent providing little respite. Earlier this week, the China Banking Regulatory Commission’s (CBRC) proposed crackdown on the $3.5-trillion Wealth management products market state that cash from “mass market” wealth products can only be invested in money or bond markets, not domestically-listed shares. Further, Peru’s energy and mines ministry, MEM, said the country produced 1.12 million fine tons of copper, a 51.5% increase from the corresponding period of last year, in the first half of 2016. MCX copper prices traded lower by 1.2% last week to close at Rs.329.7 per kg.
Outlook Copper is likely to trade lower today as China’s manufacturing PMI printed lower than the expectations indicating that the slowdown in the economy continues to bother market sentiments. On the other hand, Bank of Japan expanded its purchases of exchange-traded funds and doubled the size of a U.S. dollar lending program; it fell short from boosting the pace of government-bond purchases. ECONOMICAL DATA Indicator Spanish Manufacturing PMI Manufacturing PMI ISM Manufacturing PMI
Country Euro UK US
Time (IST) 12:45pm 2:00pm 7:30pm
Forecast 51.6 49.1 53.1
Previous 52.2 49.1 53.2
Impact Medium High High
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