Wednesday, 27 September 2017

Commodity Market Outlook Today 27-Sep-2017

Gold prices may trade lower in the coming fortnight 

On a fortnightly basis, global equity markets traded on a positive note as a result of the dovish statement made by the US Federal Reserve Chair Janet Yellen, who commented on the need for stabilization of foreign economies and its markets. She also stated that further appreciation of the American currency would depress inflation and exports thereby hurting the manufacturing sector of the nation. Furthermore, the US policymaker was sceptical that the recent rise in core inflation will prove durable. 
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All of these factors acted as a positive factor for the merging market economies. Moreover, growth of loans to the private sector in the euro area picked up modestly on February 16. This infused optimism in the markets as borrowing is a main financing source for corporate investment, which in turn should boost the euro zone's currently weak economy. 
The Indian Rupee appreciated marginally by 0.03 per cent in the last fortnight owing to persistent selling of the American currency by exporters and banks. 

Gold prices trajectory from hereon are a combination of interest rate hike in the US, investment demand stronger dollar and GDP growth from the US. We expect gold prices to trade lower in the coming fortnight. 

Crude oil prices rally in the recent past could fade soon as global inventories remain exceedingly high while the OPEC and Non OPEC producers decision to produce lower oil output will be a close watch in the weeks ahead. 

We expect base metal prices to trade lower as latest jobs numbers from the US indicate a strong momentum, thereby increasing the chances of arte hike as soon as April. Also, CFTC data indicates falling investor interest in the red metal. Further, investors will keenly watch Janet Yellen speech and Chinese GDP data. 

We expect Chana prices to trade sideways to higher on news of government procurement and good demand from stockists and traders. Moreover, expensive imports and reports of bad weather during arrival season may support for chana prices. 

We expect Soybean prices to trade sideways on higher on good crushing demand as supplies have reduced. Similarly, CPO prices may also trade higher on reports of higher demand and lower world production estimates. 

We expect cotton prices to trade sideways on muted demand in the domestic market. Reports of higher carryover stocks too weigh on prices.

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