easing programmed, blaming Britain's decision to leave the European Union as the biggest uncertainty facing world market
Fundamental Report 2nd Aug 2016 Gist of Report Gold - Gold prices to get a boost post BOJ monetary stimulus. Crude Oil - Global supply glut a cause of concern for oil markets. Copper - Top Chinese official pledge to do whatever it takes to boost growth in the economy.
Bullion – On Monday, spot gold prices rose marginally by 0.17% to close at $1352.9 per ounce as investors cut expectations for a U.S. interest rate hike in the near term. The U.S. Federal Reserve gave no hints of any near-term interest rate rise as some had expected it to at its monthly policy meeting last week. Early on Monday, New York Fed President William Dudley said the central bank should be cautious on interest rate increases due to lingering risks to the U.S. economy. On the MCX, gold prices declined by 0.11% to close at Rs.31562 per 10 gms. Silver touched a three-week high of $20.64 an ounces, and is up 47 percent since the start of the year, outpacing gains in the rest of the precious metals complex. On the MCX, silver prices rose half a percent to close at Rs.47717 per kg.
Outlook The US Federal Reserve’s decision has maintained its status quo by not doing rate hike in its recent meeting indicating that the growth in the economy needs to gain further. Besides, The Bank of Japan has announced a modest expansion of its monetary easing programmed, blaming Britain’s decision to leave the European Union as the biggest uncertainty facing world markets. Markets will closely monitor this week's data, which includes the monthly non-farm payrolls report on Friday.
Energy – WTI oil prices declined by 3.7% on Monday to close at $40.1 per barrel for the first time since April, as oil prices settled down nearly 4% on heightened worries of a crude glut despite peak summer fuel demand. A nearly 15-percent slump in U.S. crude prices in July, the worst monthly loss in a year, also triggered liquidation as trading began for August. Monday's slide in crude prices also came after Marathon Petroleum unexpectedly shut its lone crude unit and an associated unit at its 212,000 barrel-per-day refinery in Robinson, Illinois, at the weekend. The cause and duration of the outage were not clear. Other data from last week showed the United States added 44 oil drilling rigs in July, the most for a month in two years, intensifying concerns that global production could again get to unmanageable levels like in 2014-2015. On the MCX, oil prices declined by 3.6% on Monday to close at Rs.2681 per barrel.
Outlook On an intraday basis, we expect oil prices to trade lower continuing its weakness from the past few trading sessions as continuous addition of oil rigs in the US is an indication that oil production will increase in the months ahead.
Base Metals – LME base metals traded mixed as China’s official and unofficial manufacturing PMI data painted a mixed picture. MCX base metals traded mixed in line with international trends. LME Copper prices traded lower by 0.9% to close at $4882/ton, as official data showed activity in China's manufacturing sector eased unexpectedly in July as orders cooled and flooding disrupted business. On the contrary, unofficial data showed China’s manufacturing activity expanded for the first time in 17 months in July. This has raised doubts about the future course of stimulus measures from China. Last week, the Federal Open Market Committee kept its overnight interest rate target in the 0.25% to 0.5 percent range although it acknowledged a sharp improvement in the labor market. MCX copper prices traded lower by 1.2% yesterday to close at Rs.325.7 per kg.
Outlook LME Copper is currently trading flat at $4884/ton. Prices are likely to trade lower today as slump in crude oil prices hurt the risk appetite, thereby leading to weakness in Asian equities. Also, Japan’s government is due to unveil details of its 28 trillion yen ($273 billion) fiscal stimulus package today, will be closely watched.
ECONOMICAL DATA Indicator Spanish Unemployment Change Construction PMI Core PCE Price Index m/m Personal Spending m/m
Country Euro UK US US
Time (IST) 12:30pm 2:00pm 6:00pm 6:00pm
Forecast -70.0K 44.2 0.1% 0.3%
Previous -124.3K 46.0 0.2% 0.4%
Impact Medium High Medium Medium
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