Commodity Outlook: Gold likely to stay flat as dollar rallies

Gold prices were trading almost flat early trade on Thursday as the US dollar remained firm after upbeat US economic data and hawkish comments from Federal Reserve policymakers raised prospects of the central bank sticking to its tighter monetary policy.

Want to know how commodities would behave today? Here's the outlook by SMC Global Securities:

Spices: Turmeric futures (Nov) is expected to trade sideways in the range of Rs 6735-6845 levels. Spot turmeric prices increased at all the markets in Erode on upcountry orders as well as arrivals of quality produce. The price of finger turmeric increased by Rs 400 a quintal at the RMC, but increased by Rs 200 at the Erode Turmeric Merchants Association.

Similarly, the price of root variety was up by Rs 400 at the RMC and Rs 250 a quintal at the Erode Turmeric Merchants Association.

In days to come, more weakness can be seen in jeera futures (Nov) as it can decline towards Rs 18800-19100 levels.

Cardamom futures (Oct) might witness correction towards Rs 1370-1330 levels. The reducing open interest at higher levels is giving an indication that the market participants are not taking much interest in creating fresh positions at current higher prices.

Oilseeds: Soybean futures (Nov) may witness consolidation in the range of Rs 3200-3270 levels. Soybean seed at Indore traded at Rs 2800-3000 per quintal. While plant delivery quoted at Rs 3150-3300 per quintal.

The arrivals have increased sharply and further inflow of oilseed into the market is expected ahead which normally happens every season during the peak harvest month.

Mustard futures (Oct) will possibly take support near Rs 4120 levels and the downside may remain capped.

Giving a boost to farmers’ income, the Cabinet Committee on Economic Affairs has approved the increase in the Minimum Support Prices (MSPs) for rapeseed & mustard the cost of production is Rs 2212 per quintal and MSP is Rs 4200 per quintal giving a return of 89.9 per cent.

CPO futures (Oct) may take support near Rs 583 levels and trade with an upside bias.

Malaysian palm oil futures gained 1.8 per cent on Wednesday with the market hitting its highest in more than two weeks, underpinned by rising crude oil prices. The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange closed up 38 ringgit, or 1.8 percent, at 2,198 ringgit ($531.30) a tonne.

Strength in rival soybean oil provided additional support to the tropical oil. Soy oil futures (Nov) will possibly trade higher towards 760-763 levels, taking positive cues from soy oil on CBOT. U.S Soybean oil climbed to its highest since late June as unseasonal rains slowed the soybean harvest in parts of the US Midwest.

Other commodities: The short covering seen in Cotton futures (Oct) may face resistance near Rs 22100-22150 levels. A steady to weak trend observed in cotton prices across central and south India on Wednesday due to slow buying amid wait and watch strategy opted by most mills.

There are some uncertainties about crop numbers due to late rainfall and adverse weather conditions in key growing states, like Gujarat and Maharashtra.

Further buyers are also waiting for prices to stabilize in the US market, which in recent weeks have dropped sharply. Any more fall in prices in the international market will certainly going to pressure domestic cotton.

Guar seed futures (Nov) is expected to trade with a downside bias and remain below Rs 4345 levels. New Guarseed crop supply has started in many markets in low volume, but it is likely to improve in the coming weeks. Also, demand for Guarseed in the last few months were on the lower side due to slow export enquiries for Guargum.

The bullish momentum is likely to persist in chana futures (Nov) as it can test 4250 levels.

Giving a boost to farmers’ income, the Cabinet Committee on Economic Affairs has approved the increase in the Minimum Support Prices (MSPs) for gram cost of production is Rs.2637 per quintal and MSP is Rs.4620 per quintal giving a return of 75.2 per cent. At Delhi, Rajasthan and Madhya Pradesh origin was up by Rs 50 each at Rs.4,425-4,450/100kg and Rs.4,300-4,325, respectively.

Also, Kantewala chana rose by Rs 50 at Rs 4,250 at Indore market.

Gold and silver: Bullion counter may witness some profit booking at higher levels as with robust US economic data and hawkish comments from Federal Reserve policymakers boosting the dollar. US services sector activity raced to a 21-year high in September and companies boosted hiring, signs of enduring strength in the economy at the end of the third quarter. The upbeat reports on Wednesday likely keep the Federal Reserve on track to raise interest rates again in December. Gold (Dec) can take support near Rs 31,150 and can face resistance near Rs 31,450 in MCX. While Silver (Dec) can take support near Rs 38,800 and it has resistance near Rs 39,250.

Base metals: Base metals prices can trade on sideways to upside path .Copper can face resistance near Rs 470 and can take support near Rs 455. Zinc can face resistance near Rs 202 and support near Rs 196. Lead can take support near Rs 148 and can face resistance near Rs 152. Nickel can take support near Rs 935 while its upside will be capped near Rs 960. Aluminium can trade with upside path as it can take support near Rs 162 and can face resistance near Rs 169.

Energy: Crude oil can take support near Rs 5600 and may face resistance near Rs 5,720 in MCX. Natural gas may trade with upside bias as it can move in range of 235-240 in MCX. US utilities likely injected an above-normal 88 billion cubic feet (bcf) of natural gas into storage last week on sustained record production levels, a poll of analysts showed on Wednesday.