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Commodity Research Report 01 May 2018 Ways2Capital.pdf

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MCX Fundamentals
Last week, spot gold prices rose 1.4 percent to trade at $1316 per ounce while MCX
gold prices declined 1 percent although rupee depreciation of around 0.9 percent
cushioned sharp downfall. Spot silver prices declined around 4 percent to close at
$16.5 per ounce in line with fall in gold and base metals prices while stronger dollar
index also exerted downside pressure on silver. Stronger US dollar and lofty bond
yields have dampened the interest in bullion for traders and investors across the
globe. Growing supply of US government debt and inflationary pressures from rising oil prices have pushed the yields on the 10 year bond yields above 3 percent for
the first time in four years.

LME Copper prices plunged 2.6 percent while MCX prices fell 2.3 percent last week
as dollar surged to three and half month highs buoyed by rising bond yields above
3% for the first time since 2014. The rise in yields was a result of expectations that
the Fed would raise interest rates more aggressively to combat inflation. Further
downside was limited as failed negotiations at Escondida mine in Chile and Grasberg in Indonesia, world's biggest Copper mines, supported the red metal. Aluminium led the losses in base metals, down by a whopping 10 percent last week, after
the US extended deadline given to American customers of Rusal to comply with
the sanctions, from June to October 2018. Nickel was the second worst performer
since the fears of sanction extension to Norilsk Nickel eased.


WTI oil prices declined by around 0.8 percent last week while MCX oil prices rose
marginally by 0.2 percent in the same time frame. Risk of renewed U.S. sanctions
on Iran, plunging Venezuelan output, and robust global demand shook off the effects of a strong dollar on oil prices.


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