Confirmed cases of COVID-19 is close to 6 million and death toll to 3,62,000 may keep the safe haven appeal in Gold intact in the long run. For now, easing lockdowns and improving equity markets are holding the prices in the range of Rs 46,500 per 10 gram at MCX and around $1,720 per troy ounce at Comex.
With US and China tensions rising on COVID-19 and Hong Kong front, the investors focus still remains bullish on the yellow metal. Weak Asian demand is negated by the strong ETF demand holding the prices above $1,700 mark from last few weeks and the uptrend may continue with targets close to $1,800 at Comex and about Rs 49,000 – 50,000 by July 2020. For the short term, we recommend a buy around Rs 46,500 levels with stoploss around Rs 46,200 and target of Rs 47,500 by the next week.
Silver on the other hand is also improving as the lockdowns are being eased and stimulus packages by many countries including China is expected to bring back some of the industrial demand for silver in coming days. The prices are holding steady above $17 at Comex and about Rs 48,600 per kg levels at MCX. We recommend a buy around Rs 48,500 mark with a stop loss of Rs 48,000 and a target of Rs 49,500 in a week's time.
WTI Crude oil prices rallied from $25 levels a month back to close to $35 a barrel recently as the news on production cuts from Saudi Arabia and Russia backed by falling US inventories during last few weeks. Easing lockdowns, China stimulus package to revive its economy also boosted confidence in crude prices, however, deteriorating US-China trade relations over South China Sea, pandemic and Hong Kong Bill followed by Thursday's rise in WTI inventories to 7.92 MB in the US a steep correction is being witnessed where the prices have come down to $32.9 as of Friday noon.
We may see some more correction in WTI prices from current levels to the levels of $30 in a couple of weeks, and hence recommend a sell on MCX Crude oil around Rs 2,500 per barrel with stoploss around Rs 2,600 targeting Rs 2,300 for the coming week.
Copper prices' recent rally got capped by the US-China rift going to the next level when US put sanctions on 33 of Chinese companies and also withdrew Hong Kong special status that is expected to have a short term dent on base metal prices especially copper. However, Chinese Stimulus package to support their economy may support the copper prices. Recent LME front delivery instruction of about 19,000 MT of copper also supporting the prices in the short term.
Easing lockdowns across European countries may also support demand for the base metals in the days ahead. We recommend a buy in MCX Copper around Rs 410 per kg, with stoploss around Rs 407 targeting Rs 418 in a week's time. However, for the year ending the prediction of stock surplus at LME is expected to be around 2,85,000 MT which may hold the prices from rallying beyond the mentioned levels during the period.
The author is Head - Commodity and Currency at Axis Securities.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.