Aug 5, 2016 - The ADP report raised speculation that the U.S. non-farm payrolls on Friday may be strong enough to revive
Fundamental Report 5th Aug 2016 Gist of Report Gold - Nonfarm payrolls data due tomorrow will be a close watch by investors across the globe. Crude Oil - Crude oil prices gain for past two trading sessions. Bargain hunting prevails. Copper - - Weak manufacturing data from major global economies a cause of concern.
Bullion – On Thursday, spot gold prices rose by 0.24% to close at $1360.8 per ounce after the Bank of England cut interest rates for the first time since 2009, though gains were muted by strength in the dollar after the previous day's upbeat U.S. jobs data. In addition to the cut in rates to a record low 0.25%, the BoE said it would buy 60 billion pounds of government debt to ease the blow from Britain's June 23 vote to leave the European Union. The ADP report raised speculation that the U.S. non-farm payrolls on Friday may be strong enough to revive expectations for a Federal Reserve interest rate hike later this year, after it lifted rates for the first time in nearly a decade in December. On the MCX, gold prices rose by 0.26% to close at Rs.31780 per 10 gms. Spot silver prices declined by 0.24% on Thursday to close at $20.3 per ounce. The fall in silver prices is in contrary to the rise in silver prices while dollar index strengthened by 0.2 percent. On the MCX, silver prices rose marginally by 0.01% to close at Rs.47677 per kg.
Outlook On an intraday basis, we expect gold prices to trade higher as the BoE has cut interest rates besides buying 60 billion pounds of government debt. Meanwhile, the Non-Farm payrolls data due today will provide further trajectory to gold prices.
Energy – WTI oil prices rose by 2.7% on Thursday to close at $41.9 per barrel with U.S. crude advancing firmly above the $40-perbarrel mark on short-covering and after a modest stockpile drop at the delivery hub for U.S. crude futures. It was a second straight day of gains for crude futures from April lows below $40, after Wednesday's 3 percent run-up powered by data showing a hefty U.S. gasoline inventory drawdown. Market intelligence firm Genscape reported that stockpiles at the Cushing, Oklahoma delivery hub for U.S. crude futures fell 89,071 barrels during the week to Aug. 2. The Genscape report came after U.S. government data on Wednesday showed a 1.1 million-barrel decline at Cushing in the week to July 29. Data from Iraq's state oil marketer showed the OPEC member's July crude production at its highest since January at 4.6 million barrels per day. On the MCX, oil prices rose by 2.6% to close at Rs.2810 per barrel.
Outlook On an intraday basis, we expect oil prices to trade lower as international markets are trading down by around 0.8%, Global supply glut continues to bother market sentiments in oil markets. The absolute crude inventories in the US stands at around 519 million barrels which is at its highest point at this time of the year further exerting downside pressure on oil prices.
Base Metals – LME base metals traded lower on strengthening dollar as nervousness over global central bank policy persisted, with China's state planner calling for policy easing but not specifying when. MCX base metals traded lower in line with international trends. LME Copper prices traded lower by 0.9% to close at $4831/ton as factory orders in the U.S., the largest copper consumer after China, slid 1.5% in June, with durable goods orders slipping by the most since December. Earlier, weak manufacturing data from major global economies took a toll on prices. U.S. manufacturing activity eased in July amid shrinking order backlogs and declining employment. MCX copper prices traded lower by 1% yesterday to close at Rs.322.3 per kg.
Outlook LME Copper is currently trading higher by 0.2% at $4840/ton. Prices are likely to trade sideways today as the Bank of England on Thursday cut its benchmark interest rate to 0.25% from 0.5%, the lowest in its 322-year history, and expects to cut the rate further in the months ahead. While on the other hand, investors will cautiously await Non-Farm Employment Change data from the US due tonight.
ECONOMICAL DATA Indicator German Factory Orders m/m Halifax HPI m/m Average Hourly Earnings m/m Non-Farm Employment Change Unemployment Rate
Country Euro UK US US US
Time (IST) 11:30am 1:00pm 6:00pm 6:00pm 6:00pm
Forecast 0.5% -0.1% 0.2% 180K 4.8%
Previous 0.0% 1.3% 0.1% 287K 4.9%
Impact Medium Medium High High High
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