Ravindra V Rao of Anand Rathi Commodities said with uncertain results of the US midterm November elections, there is every chance that the yellow metal starts to appreciate in the last four months of 2018
Ravindra V Rao
Anand Rathi Commodities
For commodities, on the MCX, the week gone by was a currency-driven rally. The rupee (spot) plunged to a fresh low of 72.9150 to the dollar. Gold swung both ways as the Indian currency depreciated. Later, as the market speculated about government intervention, the rupee appreciated sharply.
The Bank of England kept interest rate unchanged, as expected. However, it flagged greater uncertainty about Brexit. Moreover, the European Central Bank (ECB) kept interest rate unchanged at its monetary policy meeting. The UK and euro-zone both posted declines in monthly industrial production.
The US welcomed China's move to discuss the trade-war issue but President Trump said it was China who needed a deal not the US.
MCX zinc fell more than 4 percent as inventories tracked by the London Metal Exchange are at a many-month high. Copper fell the most in more than a week on rebound in the dollar and concern about growth of the Chinese economy. The dollar regained momentum as Trump said he wanted tariffs on $200 billion of imports from China despite forthcoming talks. Only aluminium was supported as strike at the world's sixth-largest mine, at Alco Corp, Australia, entered its second month.
Crude oil spiked as the Islamic State claimed responsibility for an attack on the headquarters of Libya's main oil company. Fears of supply disruption due to Hurricane Florence of category 4 in the US also supported the rally.
Crude slipped on Thursday, reversing all gains it made in the first half of the week, as OPEC in its monthly report trimmed its forecast for 2019 global oil demand growth and said risk to its economic outlook was skewed downward, adding a fresh challenge to the group’s efforts to support the market next year.
We believe gold will be theme of the week, although it will be a holiday-shortened one. The Indian rupee has begun to appreciate as the Narendra Modi government is taking steps to check the fall in the rupee. In the past, investors have bought gold in September and even investment demand turns positive in that month. Hence, we do not rule out the possibility of a reversal.
Gold prices might be supported by political developments in America. US President Trump is already feeling the heat with his predecessor Barack Obama having entered the fray for the midterm November elections, campaigning for the Democrats. With the uncertain results of the elections, there is every chance that the yellow metal starts to appreciate in the last four months of 2018.Disclaimer: The author is Head - Commodity Research & Advisory at Anand Rathi Commodities. 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.