Emkay's report on precious metals & energy:
Precious Metals:- US Comex gold futuresor August delivery settled down USD 16.20 an ounce at USD 1,366.90, with trading volume at around half of its 30-day daily average.
- Gold prices were down as investors feared Fed will announce the tenure of its bond buying program today. Any scale down in bond buying is likely to hurt gold’s inflation hedge appeal.
- Also, US inflation showed signs of improvement, easing fears of a possible deflation which jolted equity markets and hurt gold’s safe haven appeal.
- SPDR Gold Trust, the largest gold-backed exchange-traded fund’s holdings declined to 1001.66 tonnes on Tuesday from 1003.47 tonnes on Monday, the lowest since Feb 2009.
- Gold prices internationally are expected to go down as investors would remain cautious ahead of the Fed meeting to gauge the health of US economy.
- Gold in India is expected to go down. However a weaker rupee can limit the downside.
- Gold for August delivery on the Multi Commodity Exchange (MCX) was up by 0.35 percent at INR 27,967/10gms and silver was up by 1.02 percent closing at INR 44,041/kg.
- US crude oil futures settled up USD 0.67 or 0.69 percent at USD 98.44 per barrel, from the previous close of USD 97.77.
- Front-month Brent futures rose 6 cents to USD 106.08 a barrel. Crude prices were up after API report showed stockpiles fell by 4.3 million barrels.
- Escalating tensions in Middle East after heavy fighting was reported in Aleppo, Syria's biggest city also supported crude prices on fears of supply disruption if other Middle Eastern nations were drawn into the Syrian conflict.
- We expect Crude oil to go slightly down as caution ahead of the Fed meeting and positive inventories data by EIA can push prices down.
- US natural gas futures ended higher on Tuesday, driven by forecasts for hotter weather in the Northeast and Midwest that should increase the demand for gas for air conditioners.
- Natural Gas is expected to move up on back of increased cooling demand for gas.
- Front-month gas futures on the New York Mercantile Exchange ended up 3 cents, or 0.8 percent, at USD 3.905 per million British thermal units after trading between USD 3.865 and USD 3.952. The front month posted a three-month low of USD 3.71 on Wednesday.
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