Weak US economic data can support gold prices: Emkay

Emkay's research report on commodities

Precious Metals:

• US Comex gold futures for August delivery settled up USD 18.90 to USD 1,411.90 an ounce, with trading volume about 40 percent below its 30-day average.
• Gold prices were supported over a weak dollar after US manufacturing data fell below expectations.
• Losses in equity markets and a halt in outflows from gold funds also pushed prices higher.
• Holdings in SPDR Gold Trust, the world's largest goldbacked exchange-traded fund, remained unchanged on Monday.
• Gold prices internationally are expected to move up as expectations of continued stimulus by Fed in the near future on back of weak US economic data can support prices.
• Gold in India is expected to move up today due to higher imports but a stronger rupee and possible restrictions by RBI on gold imports after it climbed to 162 tons in May can put pressure on prices.
• Gold for August delivery on the Multi Commodity Exchange (MCX) was up by 1.34 percent at INR 27,340/10gms and silver was up by 2.09 percent closing at INR 44,414/kg.

Energy:

• US crude futures settled up USD 1.48 or 1.61 percent to settle at USD 93.45 per barrel.
• Brent crude oil futures settled on Monday USD 1.67 higher at USD 102.06 a barrel after touching a high of USD 102.48.
• Output at the Buzzard oilfield in the UK North Sea dropped to zero on Monday after a problem at the weekend, reducing supply of the Brent crude and pushed prices higher.
• Weak US manufacturing data supported oil prices by pushing the dollar lower and easing fears that the U.S. Federal Reserve may withdraw its quantitative easing policy.
• US auto sales rose more than expected in May which also supported oil prices ahead of the driving season in US. We expect crude oil prices to go up as a storm warning around the Gulf of Mexico and the ongoing tensions in Syria can support prices.
• US natural gas futures ended higher on Monday, on light technical buying and bargain hunting after last week's slide.
• Natural gas is expected to go down as above normal temperatures are likely to keep demand for gas subdued.
• Front-month July natural gas futures on the New York Mercantile Exchange ended up 0.7 cent at USD 3.991 per million British thermal units after trading between USD 3.951 and USD 4.04.

Base Metals

• In New York, COMEX copper for May delivery closed at USD 3.33 a tonne, up USD 0.04, or 1.15 percent.
• Copper prices rose on supply concerns after Freeport, the world’s second largest mine in Indonesia is expected to remain shut for three months.
• However the upside in copper was limited as the US manufacturing PMI for May fell to 49 from 50.7 in April.
• Base metals are expected to move higher as a weaker dollar and supply concerns over reduced output from mines can support prices.
• Three-month copper on the London Metal Exchange rose to a session peak of USD 7,397 a tonne, before paring gains to end at USD 7,340 a tonne, from a last bid of USD 7,308 on Friday.

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