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Weekly Commodity: An average week, sees a minor correction

SMC | 07 Aug, 2017  | Follow Author | Add to my Favourites 
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Weekly Commentary            


It was an average week for commodities in which we saw minor correction. Action was more in riskier assets; hence commodities witnessed dull trading. Bullion counter saw a pause in rally on profit booking from higher levels. Gold prices drifted further away from seven-week highs hit earlier, as the dollar firmed on expectations the U.S. Federal Reserve could trim its bond holdings in September. Additionally, global demand for gold fell 14% in the first half of this year due mainly to a sharp decline in purchases by exchange traded funds, as per WGC. Gold's safe haven appeal is dampened when an economy shows signs of strengthening, making investors turn towards riskier assets such as equities. Central bank buying also fell slightly in the first half but purchases of bars, coins and jewellery grew thanks to strong demand in India and Turkey. Silver too closed the week in negative territory on profit booking from higher levels amid sideways base metals. Mix trend noticed in base metals counter. Copper and zinc were down whereas nickel, lead and aluminum prices edged up. Copper rallied, thanks to continuing speculation of a Chinese ban on scrap containing copper. Oil prices plunged back below $49 a barrel after more reports that OPEC's output rose last month despite the cartel's deal to slash production. Baker Hughes reported that a small rise of 2 in the number of rigs looking for oil last to last week. That pushed them up to 766. The EIA bucked the negative trend, however, and reported a 1.5-million-barrel draw in commercial oil inventories. Over the last week, weather has turned increasingly more bearish for natural gas and thus the prices further moved down.

It was a bearish week for oil seeds and edible complex on poor trend in international market. Soyabean futures also traded down on subdued cues from local spot market. Castor seeds prices also slipped as traders were anticipating higher acreage this year which may lead to higher production amid limited demand from millers. Guar counter saw solid performance as spot market was buoyant on better export demand. Export numbers of guargum improved on increasing rig count in US. Mentha rally overstretched on speculative demand. In spices, jeera and dhaniya prices closed down whereas cardamom, turmeric and pepper prices augmented.

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SMC Research, founded in 1990, is India’s leading share and stock broker, provides a wide range of financial services and investment solutions. A blend of extensive experience, diverse talent and client focus has made us the 4th largest broking house in India(Source: Dun and Bradstreet, 2008). Over the years, SMC has expanded its operations domestically as well as internationally. Existing network includes regional offices at Mumbai, Kolkata, Chennai, Cochin, Ahmedabad, Jaipur, Hyderabad, Bangalore plus a growing network of 2100+ offices spread across 425 cities/towns in India.

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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