MCX Commodities Pivot levels – December 08

MCX non agriculture commodities pivot levels for December 08

Pivots Points are significant levels which can be used to determine directional movement and potential support/resistance levels. Below are the pivot points for MCX Non-Agriculture Commodities for December 08.

MCX Commodities Pivot levels – December 08
Commodity Close S1 S2 Pivot R1 R2 Today’s Trend
Aluminium 130 129 128 130 130 131 Bearish
Copper 426 424 421 427 430 433 Sideways Bullish
Crudeoil 3657 3621 3584 3640 3677 3696 Bullish
Gold 28667 28572 28477 28748 28843 29019 Bearish
Lead 158 155 153 159.4 161 165 Bearish
Naturalgas 180 176 172 182.7 187 194 Bearish
Nickel 710 698 685 705 718 725 Sideways Bullish
Silver 37036 36861 36685 37167 37343 37649 Bearish
Zinc 199 198 197 200 201 202 Bearish

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BSE Metal index down 1.6% as Commodity prices show further weakness

Copper prices touched a 2 month low of $6,580 per tonne over concerns of slowdown of Chinese infrastructure spending. Build up of copper inventories was also the cause for further bearishness. Copper inventories at LME warehouses rose from 10,650 tonnes to 192,550 tonnes. On the MCX, Zinc and aluminum prices were down 0.55% and 0.38% respectively. However, copper prices traded higher by 0.7%.

As per an economic survey, Chinese fixed-asset investment in infrastructure is estimated to grow at 12% next year against 20% in the first 10 months of 2017. China is stepping up efforts to reduce overcapacity in industry, which is feared to reduce demand for base metals going forward.

Metal stocks continued their decline from yesterday. Vedanta and Hindustan Zinc lost 2.8% each with Hindalco losing 2.9%. Steel stocks were less affected with JSW Steel, SAIL and Tata Steel down by 1.87%, 2.24% and 1.94% respectively.

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Gold steady as Dollar firms ahead of US Consumer Data

Gold prices held steady early Wednesday, after hitting a more than one-week low in the previous session, as the dollar firmed and investors waited for cues from U.S. consumer inflation data.

FUNDAMENTALS

Spot gold was nearly unchanged at $1,280.90 per ounce at 0103 GMT. On Tuesday, gold touched a session low of $1,270.56, a bottom since Nov. 6, before recovering to gain about 0.2 percent.

U.S. gold futures for December delivery slipped 0.2 percent to $1,280.90.

The dollar index , which tracks the U.S. currency against a basket of six major rivals, edged up 0.1 percent. The immediate focus for the dollar was data on U.S. consumer prices due later in the day.

Four of the world’s top central bankers promised on Tuesday to keep openly guiding investors about future policy moves as they slowly withdraw the huge monetary stimulus rolled out during the financial crisis.

U.S. Senate Republicans on Tuesday linked repealing a key component of Obamacare to their ambitious tax-cut plan, raising new political risks and uncertainties for the tax measure that financial markets have been monitoring closely for months.

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Expect Crude Oil to Trade Positive

crude-oil

Oil prices settled slightly lower on Wednesday after U.S. government data showed rising domestic crude production, a surprise build in U.S. stockpiles and a decline in monthly Chinese crude imports, a triple blow that was offset somewhat by rising tensions in the Middle East. The EIA also said crude stocks increased by 2.2 million barrels, shocking the market after analysts polled by Reuters had forecast a 2.9 million – barrel draw and industry group the American Petroleum Institute on Tuesday reported a decline of 1.6 million barrel. China’s October oil imports fell to just 7.3 million bpd from a near record – high of about 9 million bpd in September, according to data from the General Administration of Customs. Traders said they w ere also watching escalating tensions in the Middle East, especially between regional rivals Saudi Arabia and Iran. Brent crude hit $64.65 earlier this week, its highest since mid – 2015, as  political tensions in the Middle East escalated after a sweeping an ti – corruption purge in top crude exporter Saudi Arabia, which in turn has  confronted Iran over the conflict in Yemen. The Organization of the Petroleum Exporting Countries’ 2017 World Oil  Outlook showed the group predicts demand for its crude will rise more  slowly than previously expected in the next two years, as higher prices  from its supply policy stimulate output growth from rival producers.

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Gold Prices to Trade Higher

commodity-market-updates-capitalheight

Spot gold traded higher by 2.3 percent last week while silver prices also rose 3.4 percent. Gold prices rose as minutes from a U.S. Federal Reserve September meeting showed policymakers had a prolonged debate about prospects of a pick – up in inflation and slowing the path of future interest rate rises if it did not. Weak dollar index and geopolitical tensions in Spain and North Korea further supported the rally in gold. Russia and China both called for restraint on North Korea following a Twitter post from U.S. President Donald Trump hinting that military action was on his mind. The focus of the markets have now shifted from the geo – political crisis  to the economic data that will be released from the US, besides, the  possibility of rate hike scenario in the US is a factor for gold prices to move lower in the week ahead.

Outlook

Geo – political crisis and economic data from US will be the key going forward, besides, the possibility of rate hike scenario in the US is a factor for gold prices to move lower in the sessions ahead. ON the MCX, gold prices are expected to trade higher today, international markets are trading lower by 0.2 percent at $1302 per ounce.

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Government Fixes rate at Rs 2,987 per Gram for Sovereign Gold Bond

The government on Friday fixed the purchase price of Sovereign Gold Bond (SGB) at Rs 2,987 per gram the subscription for which will open on October 16, a few days before Dhanteras festival.

Dhanteras is considered auspicious for buying gold and jewellery.

For the subscription period from October 16-18, the nominal value of the bond based on the simple average closing price for gold of 999 purity of the last three business days of the week preceding the subscription period, that is October 11-13, 2017 works out to Rs 2,987 per gram, the RBI said in a statement.

This is a part of SGB calender announced till December spread over 12 weeks. As per the calender it will open for subscription from Monday to Wednesday of every week starting from October 9 until December 27. The first tranche under this closed on October 11.

The settlement will be made on the first business day of the next week for the applications received during a given week.

The maximum limit of subscribed would be 4 kg for individual and HUF and 20 kg for trusts and similar entities per fiscal (April-March) notified by the government from time to time.

The annual ceiling will include bonds subscribed under different tranches during initial issuance by the government and those purchase from the secondary market.

Investors in these bonds have been provided with the option of holding them in physical or dematerialized form.

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How Introduction of Options will affect Commodity Markets

Finally, the wait is over for Commodities Market as MCX is all set to launch Options in Gold in the month of October. This will be a game changer for the commodities market as it will result in the participation of new players in the market as it carries low risk with it as compares to Futures.

Let’s have a basic understanding of Option First.

An option is a financial derivative that represents a contract sold by one party (the option writer) to another party (the option holder). The contract offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price (the strike price) during a certain period of time or on a specific date (exercise date).

Main Advantage of Option over Future

In future trading, the trader is exposed to big losses whichever side of the contract you are on. If you have the obligation to buy an underlying security at a fixed price and the security moves significantly above that fixed price, then you could lose substantial sums. Conversely, if you have the obligation to sell an underlying security at a fixed price and the security moves significantly below that fixed price then you could experience sizable losses.

If you are writing options contracts and taking on an obligation to either buy or sell an underlying security at a fixed price, then you are exposed to similar risks. However, you can trade options purely by buying contracts and not writing them. This means that you can limit your potential losses on each and every trade you make to the amount of money you invest in buying specific contracts. Whenever you buy options contracts, the worst case scenario is that they expire worthless and you lose your initial investment.

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