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Gold may remain choppy, but buying may emerge at lower levels: Kotak Securities


BSE Oil & Gas| During the October-December quarter the Oil & Gas index remained positive for 6 out of 10 times.  The index performance in the same period for the year 2019: 1%, 2018: -7%, 2017: 10%, 2016: 7%, 2015: 10%, 2014: -8%, 2013: 8%, 2012: -2%, 2011: -11%, and 2010: 1%.

BSE Oil & Fuel| In the course of the October-December quarter the Oil & Fuel index remained optimistic for six out of 10 occasions.  The index efficiency in the identical interval for the yr 2019: 1%, 2018: -7%, 2017: 10%, 2016: 7%, 2015: 10%, 2014: -8%, 2013: 8%, 2012: -2%, 2011: -11%, and 2010: 1%.

Ravindra Rao

COMEX gold trades 0.5 p.c decrease close to USD 1934/oz after a 0.5 p.c acquire on September 8. Gold fell as little as USD 1911.7/oz in intraday commerce on September 8 however bounced again to finish larger. Combined components have led to directionless commerce in gold and this will proceed within the close to time period.

Supporting gold value is elevated protected haven demand amid sell-off in fairness markets, uneven world financial restoration, rising virus circumstances, elevated US-China tensions and Brexit uncertainty. US and world fairness markets have corrected sharply from the highs as market gamers questioned the rally in face of rising challenges to world economic system.

Virus circumstances proceed to rise globally whereas resurgence of circumstances is being reported in lots of European international locations like France, and so forth. US-China are at loggerheads over numerous points .Brexit uncertainty rose amid lack of progress in UK-EU negotiations and as Britain threatened to undercut its divorce treaty with the European Union.

Nevertheless, weighing on gold value is beneficial properties in US greenback index. The US foreign money has benefitted from blended European financial information, place squaring forward of ECB assembly tomorrow, Brexit uncertainty and protected haven shopping for amid sell-off in fairness markets. Additionally weighing on value is lack of ETF shopping for regardless of correction in costs.

Gold holdings with SPDR ETF had been unchanged for a 3rd day at 1250.042 tonnes. The latest motion in gold signifies that costs are caught in a broad vary of USD 1900-2000/oz and directionless commerce could proceed until both facet is damaged.

Gold could stay uneven however shopping for could emerge at decrease ranges amid growing world uncertainty and likewise as Fed’s dovish stance could restrict upside in US greenback.

 

Crude oil together with different commodities are additionally pressurized by beneficial properties in US greenback index on again of Brexit uncertainty and positioning forward of ECB assembly. Aside from basic weak spot in monetary market, crude oil can be pressurized by improve in OPEC’s manufacturing and Saudi Arabia’s transfer to cheaper price for Asian clients amid indicators of weaker demand.

US EIA in its month-to-month outlook painted a blended image because it lowered the 2020 estimate for US crude manufacturing however raised the forecast for subsequent yr. Nevertheless, supporting value is expectations of one other decline in US crude oil shares.

NYMEX pure gasoline trades about 1 p.c decrease close to USD 2.37/mmBtu after a pointy 7.3 p.c decline in earlier session. Pure gasoline got here underneath strain as blended climate forecasts for US dented demand outlook. Additionally weighing on value is blended rig exercise and restart of Gulf of Mexico manufacturing publish closures attributable to storm exercise.

A pointy sell-off in crude oil value additionally weighed on pure gasoline costs. Nevertheless, supporting gasoline value is decide up in LNG exports as port normalized operations after storm associated disruptions. EIA has additionally revised down its manufacturing estimate for this yr and subsequent indicating tighter markets. Pure gasoline has corrected nearly 14 p.c from the November 2019 excessive set late final month. The sell-off has dented market sentiment and weak spot may persist nonetheless we count on some place squaring forward of stock report tomorrow. Focus could proceed to be on US climate, pattern in power costs and storm exercise in Atlantic.

The creator is VP- Head Commodity Analysis at Kotak Securities

Disclaimer: The views and funding suggestions expressed by funding specialists on moneycontrol.com are their very own, and never that of the web site or its administration. Moneycontrol.com advises customers to test with licensed specialists earlier than taking any funding selections.​

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