COMEX gold trades little changed near USD 1,912/oz after a 0.1 percent gain on October 15. Gold fell as low as USD 1,892.7/oz in intraday trade on October 15, but recovered to end little changed near USD 1,908.9/oz.
Gold has witnessed directionless trade in last few sessions but continues to hold within the broad range of USD 1,880-1,930/oz and we may not see a break out of it unless there is more clarity on US stimulus, Brexit and virus situation.
Similar directionless trade was also evident in other asset classes. US DJIA index recouped most of the losses to end little changed yesterday. The US dollar index ended with modest gains reversing the losses noted a day earlier. On US stimulus front, policymakers continue with efforts to finalize a fiscal package however, possibility of a deal before election is quite low. Setback on vaccine trial and treatment has also led to uncertainty about possible timeline for a vaccine.
Meanwhile, mixed economic data highlights the uneven economic recovery. US jobless claims unexpected rose last week showing pressure on labor market. The US dollar index hit 1-week high yesterday on safe haven buying and increasing concerns about health of European economies amid rising virus cases and Brexit uncertainty however concerns about health of US economy continues to weigh.
Amid other factors, ETF outflows show some profit taking by investors however, the pace was marginal. Gold holdings with SPDR ETF fell by 1.9 tonnes to 1276.061 tonnes, first decline since October 6.
Gold may remain directionless amid so many uncertain factors however, we may see buying interest emerging at lower levels as concerns about US economy may limit upside in US dollar.
Base metals on LME trade mixed to positive in early trade Friday after a mixed close in previous session. Recovery in US equity market and pause in US dollar’s rise has lent some support while weighing on price is disappointing US data and rising virus cases.
Continued efforts to resolve the deadlock over US stimulus helped risk sentiment recovery however uncertainty persist as possibility of a deal before elections seems lows. The US dollar has benefitted from safe haven buying and increasing concerns about health of European economies amid rising virus cases and Brexit uncertainty. However, weighing on US currency is concerns about health of US economy.
Virus cases have been rising globally however resurgence of cases in Europe and parts of US Midwest has made market players nervous. Mixed economic data and downbeat growth forecasts have added to demand uncertainty for commodities at large. US jobless claims unexpectedly rose last week while Empire state manufacturing index fell more than expectations. On other hand, Philadelphia Fed manufacturing index showed improvement.
Individually, copper remains supported by robust China imports and supply concerns relating to Chile however rising stocks at LME has limited upside. Nickel, is supported by expectations of smaller surplus next year. A global nickel market surplus of 117,000 tonnes is forecasted for this year, with excess supply narrowing to 68,000 tonne in 2021, the International Nickel Study Group said.
In other metals, Lead and Zinc prices are pressurized by higher stocks at LME however general downtrend in stocks at SHFE and robust demand outlook from China has lent support.
Base metals may witness choppy trade as market players assess situation relating to US stimulus, Brexit and virus outbreak. However, with increasing concerns about health of global economy amid rising virus cases and uneven economic recovery, the general bias may be on the downside.
The author is VP- Head Commodity Research at Kotak SecuritiesDisclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.