Why Gold Loosing It Shine

Bullion Outlook

Gold is trading at $1306, down by 0.35%. The expectation of scaling down of Quantitative easing on the back of positive economic numbers from the US supported gains in the other riskier assets. This pressurized gold prices to trade down in the morning session. Euro zone producer price index should remain weak which would limit the gains in the shared currency and weigh down gold prices. During the US hours, the nonfarm payrolls are expected to increase which might support gains in the US dollar and weigh down gold prices. At the MCX, appreciation in the rupee against dollar might keep gold prices under pressure. Therefore gold prices might remain on the downside due to the appreciation in the dollar index. Investors should remain cautious in the evening session as volatility in gold prices is expected.

Base Metals Outlook

Base metals to witness a flat to positive opening at the MCX, supported by a weak rupee (appreciated 0.61 % early morning). Fundamentally, the supply of aluminum, nickel and zinc should remain higher and should cap gains in these metals. However lower supply of lead (due to environmental concerns) should support gains in lead prices. Aluminum premiums in euro-zone have declined from $275/MT to $250-45/MT after the new warehousing guidelines from the LM E which should support higher spot supply and limit the gains in prices. While in lead market, Chinese lead scrap prices and refined metal should continue to remain high as the state increases the factory vigilance and propels closure of polluting lead acid battery facilities. Further, the inventory data has mostly remained mixed in the first four days of this week and hence we expect the heterogeneity in base metals should continue in today’s session.

Energy Outlook

Crude Oil prices are increasing along with the industrial metals space and the US and European equity indices as strong manufacturing readings from the either side of Atlantic and Pacific have bolstered the outlook for improvement in the segment. Amongst the commodity specific cues, WTI also got additional support from recent comments from US President Barack Obama. In a recent interview, US President hinted that the ongoing pipeline expansion by Keystone XL could be used for reducing the glut in the storage location at Cushing and exporting the oil to world markets. While, the US government policy framework doesn’t allow the same thing as of now, there is a possibility of see some developments on the same in coming months. For the day, the most important cue in financial markets will be the US non-farm payrolls. As per average markets estimates, the Labor department report might show US economy added more than 180K jobs in the month of July. We are expecting some extra boost from the report as the weekly Jobless claims data lately and the ADP report on Wednesday this week have been on a positive note.

Mentha Oil Outlook

Yesterday, a positive movement was noticed in the spot quotation, consequently futures market prices also raised. Spot prices at the Barabanki mandi quoted at Rs 15/kg higher compared to the previous day’s spot prices. Meanwhile at the Chandausi and Sambhal mandis spot prices were Quoting Rs 13/kg higher compared to the previous day’s prices. Favorable weather conditions led higher arrivals compared to the previous day’s arrivals. Across the major mandis of Uttar Pradesh, arrivals were hovering around 1400 –1500 drums (1 drum = 180 kg). Despite higher arrivals at spot front, upsurge in export demand supported the upside trend in mentha prices. According to the trade sources, harvesting is almost completed in major mentha growing regions of Uttar Pradesh (which contributes 65% -70% in mentha production).Rising demand from pharmaceutical segments with parallel supply are leading prices towards uptrend. Looking at the supply and export scenario mentha oil prices are expected to trade on a positive note during today’s trading session.

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Date Time Region Event Period Survey Prior
02.08.2013 02:30 US Domestic Vehicle Sales Jul 12.40M 12.43M
02.08.2013 14:00 UK PMI Construction Jul 51.5 51
02.08.2013 14:30 EC PPI MoM Jun 0.00% -0.30%
02.08.2013 18:00 US Change in Nonfarm Payrolls Jul 185K 195K
02.08.2013 18:00 US Change in Private Payrolls Jul 187K 202K
02.08.2013 18:00 US Change in Manufact. Payrolls Jul 0K -6K
02.08.2013 18:00 US Unemployment Rate Jul 7.50% 7.60%
02.08.2013 18:00 US Personal Income Jun 0.40% 0.50%
02.08.2013 18:00 US Personal Spending Jun 0.50% 0.30%
02.08.2013 19:30 US Factory Orders Jun 2.30% 2.10%
02.08.2013 06:30 CH Non-manufacturing PMI Jul 53.9