Gold hovers near two-month highs on North Korea tensions

Commodity Opening Bell 

Bullion - Opens on positive Note Gold -29200-29210 Silver -39200-39230 

Energy - Opens on mixed Note Crude Oil -3100-3110 Natural Gas -192-191.80 

Base Metals - Opens on negative Note Copper -480.70-409 Nickel -688-690 Lead -150-150.40 Zinc - 186.50-187 Aluminium -129.10-129.20

COMMODITY MARKET NEWS

Precious Metals

Precious metals are likely to open higher and a weaker INR is likely to push domestic prices further up as geo-political factors dented sentiment in global markets. The saber-rattling between US and North Korea has kept markets on the edge this week and we have seen volatility rise across the board. The CBOE VIX jumped 44% and the S&P 500 saw the biggest decline since May. While a full-fledged conflict is unlikely, risk premium has built up in global assets and the short-term market action is going to be very choppy.

Base Metals 

Base metals took a breather yesterday after the recent rally set over the last 1 week. Some profit taking emerged in wider markets as investors fretted about the simmering tensions between the United States and North Korea. China aluminium extended gains to strike its highest since 2012, with investors flooding into the market on prospects that capacity closures in China would tighten supply. Chinese steel futures rose to trade near a 4-1/2-year high, supporting prices of key input materials zinc and nickel, as investors remained bullish ahead of production cuts in the China. Given the geopolitical tension, bounce in dollar index and some profit taking in equities globally, base metals could be under pressure for the short term.

Energy 

Crude oil is likely to open lower after yet another choppy session yesterday where prices corrected sharply after hitting two month highs. The general risk off sentiment in markets coupled with comments from Russia led to the sharp dive. Russia’s Gazprom indicated that it could lift production from mature fields once the OPEC deal expires. The OPEC monthly report was however supportive as it raised demand forecast by 0.1 mbpd to 1.4 mbpd for 2017. The OPEC also revised Non-OPEC supply growth lower by 0.28 mbpd to 57.77 mbpd this year.