Today Commodity News : 18.11.2019
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Gold to drift lower this week as Fed policy minutes will be in focus
In a shortened last week, MCX Gold appreciated 0.9 percent and Comex Gold rose 0.5 percent week-on-week. Last week, the major rise in gold came from weakness in the rupee.
India reported weak set of economic data. India's industrial production de-grew at 4.3 percent in September against a de-growth of 1.4 percent a month ago. CPI too rose above RBI's comfort zone (4.62 percent in October versus 3.99 percent in September). In October, US Federal budget deficit widened to $134 billion from $83 billion surplus in October. Weekly jobless claims increased from 2,11,000 a week ago to 2,25,000 last week.
The political unrest in Hong Kong has also supported gold, which is considered an alternative investment during times of geopolitical and financial uncertainty. Nonetheless, the upside was limited. The US is getting close to a trade agreement with China, White House Economic Adviser Larry Kudlow said, citing what he called very constructive discussions with Beijing.
Fed Chairman Jerome Powell sounded mostly upbeat during his Congressional testimony. He said the US economy is a 'star' performer and officials expect 'continued moderate growth'. There are few warning signs that the expansion or financial markets will get derailed, he added, while repeating general concerns about trade uncertainty and rising debt.
Fed Vice Chairman Richard Clarida called the economy "at or close to maximum employment and price stability." Holding at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund has reduced from 901 tonne as on November 8 to 896.77 tonne on November 15.
Gold may weaken this week since sentiment has turned positive for the riskier asset classes with US and China progressing slowly but in a constructive manner. US economic growth could slow further in the fourth quarter. October figures showed weakness in a majority of retail categories and factory production declined, even excluding a strike-related plunge in vehicle output. Overall retail sales advanced 0.3 percent from the prior month after a 0.3 percent drop in September. Manufacturing output fell 0.6 percent, and total industrial production slumped 0.8 percent.
On November 19, US will publish building permits and housing starts. On November 21, Philly Fed manufacturing index and existing home sales for October will be released. Markit will release provisional manufacturing PMI for Germany, Euro-zone & US on November 22. Hence, the dollar will be volatile as well as the yellow metal.
The breadth of Fed dissent over the October rate cut will be the highlight of minutes to be released on November 20, though officials have stuck by the "done for now" mantra since then. The minutes of Mario Draghi's last ECB meeting are unlikely to rock any boats or indeed float them on November 21 as the statement and his press conference contained no surprises. They may give details of the discussion about the composition of asset purchases.
Holdings at SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell marginally to 897 tonne on November 15 from 901.19 tonne a week prior. The downside could be limited since political unrest in the Hong Kong may revive safe haven buying in the coming week. Secretary of State Mike Pompeo called on Beijing to honour local autonomy, and police detained two Germans who were reporting on unrest.
In a shortened last week, MCX Gold appreciated 0.9 percent and Comex Gold rose 0.5 percent week-on-week. Last week, the major rise in gold came from weakness in the rupee.
India reported weak set of economic data. India's industrial production de-grew at 4.3 percent in September against a de-growth of 1.4 percent a month ago. CPI too rose above RBI's comfort zone (4.62 percent in October versus 3.99 percent in September). In October, US Federal budget deficit widened to $134 billion from $83 billion surplus in October. Weekly jobless claims increased from 2,11,000 a week ago to 2,25,000 last week.
The political unrest in Hong Kong has also supported gold, which is considered an alternative investment during times of geopolitical and financial uncertainty. Nonetheless, the upside was limited. The US is getting close to a trade agreement with China, White House Economic Adviser Larry Kudlow said, citing what he called very constructive discussions with Beijing.
Fed Chairman Jerome Powell sounded mostly upbeat during his Congressional testimony. He said the US economy is a 'star' performer and officials expect 'continued moderate growth'. There are few warning signs that the expansion or financial markets will get derailed, he added, while repeating general concerns about trade uncertainty and rising debt.
Fed Vice Chairman Richard Clarida called the economy "at or close to maximum employment and price stability." Holding at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund has reduced from 901 tonne as on November 8 to 896.77 tonne on November 15.
Gold may weaken this week since sentiment has turned positive for the riskier asset classes with US and China progressing slowly but in a constructive manner. US economic growth could slow further in the fourth quarter. October figures showed weakness in a majority of retail categories and factory production declined, even excluding a strike-related plunge in vehicle output. Overall retail sales advanced 0.3 percent from the prior month after a 0.3 percent drop in September. Manufacturing output fell 0.6 percent, and total industrial production slumped 0.8 percent.
On November 19, US will publish building permits and housing starts. On November 21, Philly Fed manufacturing index and existing home sales for October will be released. Markit will release provisional manufacturing PMI for Germany, Euro-zone & US on November 22. Hence, the dollar will be volatile as well as the yellow metal.
The breadth of Fed dissent over the October rate cut will be the highlight of minutes to be released on November 20, though officials have stuck by the "done for now" mantra since then. The minutes of Mario Draghi's last ECB meeting are unlikely to rock any boats or indeed float them on November 21 as the statement and his press conference contained no surprises. They may give details of the discussion about the composition of asset purchases.
Holdings at SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell marginally to 897 tonne on November 15 from 901.19 tonne a week prior. The downside could be limited since political unrest in the Hong Kong may revive safe haven buying in the coming week. Secretary of State Mike Pompeo called on Beijing to honour local autonomy, and police detained two Germans who were reporting on unrest.