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Precious Metals Turn Volatile With Bearish Bias

Author: SMC Global Securities Ltd/Wednesday, January 13, 2021/Categories: Exclusive

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Precious Metals Turn Volatile With Bearish Bias

Bullion counters may continue to trade with bearish bias where Gold may test Rs48,800/10gm and facing resistance near Rs49,500, while silver may trade with higher volatility where it may test Rs64,600/kg and facing resistance near Rs65,900. Gold prices steadied on Tuesday as Asian stocks traded lower, dragged by political unrest in Washington and rising global Covid-19 cases, outweighing a firmer dollar and US. Treasury yields. spot gold was little changed at $1,845.19 per ounce. The US gold futures eased 0.3 per cent to $1,845.90. In Asia trading, Japan's Nikkei slipped 0.48 per cent, South Korea's KOSPI fell 0.91 per cent and Hong Kong's Hang Seng index futures lost 0.54 per cent. Benchmark Treasury yields held firm at 10-month highs as investors adjusted for higher government spending under the Joe Biden administration, helping the dollar rebound and making gold expensive. Investors also kept an eye on the US. House of Representatives, where Democrats plan to impeach President Donald Trump after drawing up charges accusing him of inciting insurrection ahead of last week's siege of the Capitol. The United States lost more than 22,000 lives to Covid-19 last week, setting a record for the second week in a row, while nearly nine million Americans had been given their first Covid-19 vaccination dose as of Monday morning. Money markets have ramped up bets on US interest rates rising in 2023, sending a shudder through global equities which may soon have to brace for the day the Federal Reserve starts scaling back aid to the economy. Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust fell 0.03 per cent to 1,181.71 tonnes on Monday. Silver gained 0.5 per cent to $25.03 an ounce.

 

Base Metals

Base metals may trade with bearish bias where Copper can move towards Rs601/kg and facing resistance near Rs608. Base metals on both SHFE and LME declined across the board on Tuesday morning after shares on Wall Street pulled back overnight from all-time highs.

Recently, the pandemic in Hebei, Heilongjiang, Liaoning and other places rebounded, with the biggest increase in new cases in a single day in five months in China, and the increase in new cases caused demand concerns. Chilean copper commission Cochilco said state miner Codelco, the world’s top copper producer, saw production rise seven per cent year-on-year (y-o-y) in November to 166,100 tonnes, while production at BHP's Escondida, the world’s largest mine, fell 12 per cent to 90,800 in the same period. Zinc may move towards Rs214/kg and facing resistance near Rs218. Lead can move towards Rs154/kg, while facing resistance near Rs156. Zinc prices may fall due to concerns of higher supply as the Canada-based Lundin Mining Corp is set to expand zinc exploration at one of its mines in Portugal from January. Nickel trade with sideways to bearish bias where it may take support near Rs1,245/kg and resistance near Rs1,270. The smelting cost of nickel pig iron, the feedstock for stainless steel, remains high because many Chinese smelters are using high-priced nickel concentrate they bought recently. Shrinking nickel inventories in warehouses monitored by the Shanghai exchange, which fell by more than half in 2020, have also added to the upward pressure on prices. Aluminum may move Rs162/kg, while facing resistance near Rs165. LME aluminium inventories fell to their lowest since April 2020 at 1.31 million tonnes, while the US aluminium premium rose to its strongest since September 16 at $329.33 a tonne.

 

Crude Oil

Crude oil may trade with sideways to bullish bias where support is seen near Rs3,810/bbl and resistance is seen near Rs3,890. Oil prices slipped on Tuesday as investors remained concerned about climbing coronavirus cases globally, though an anticipated drawdown in crude oil inventory in the United States for a fifth straight week stemmed losses. Worldwide coronavirus cases surpassed 90 million on Monday, according to Reuters tally, as nations around the globe scramble to procure vaccines and continue to extend or reinstate lockdowns to fight new coronavirus variants. Brent could rise to $65 per barrel by summer 2021, Goldman Sachs said, driven by Saudi cuts and the implications of a shift in power to the Democrats in the United States. The Wall Street investment bank had previously predicted oil would hit $65 by year-end. Still, the oil price losses were curbed by plans for US President-elect Joe Biden to announce trillions of dollars in new coronavirus relief bills this week, much of which will be paid for by increased borrowing. Crude prices remained supported by Saudi Arabia’s pledge last week for a voluntary oil output cut of 1 million barrels per day (bpd) in February and March as part of a deal under which most OPEC+ producers will hold production steady during new lockdowns. Natural gas may trade with higher volatility and trade with bullish bias where resistance is seen near Rs203/mmBtu and support near Rs194.

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