MCX Outlook- Base metals and Precious Metals

Precious Metals
 
Gold stays firm above $1355 levels as the dollar index remains lower amid the ongoing Federal Reserve meeting which concluded tomorrow. The Fed may announce quantitative easing plans of as much as $500 billion. Silver also rose to $24.68/oz in Europe. However, similar margins were not seen in the bullion prices in Asian markets such as; Australia and India. Both these two countries have raised their benchmark interest rates by 25 basis points which appreciated their respective currencies and limited gains of precious metals. Australian dollar gained over 1% to 0.9982 levels while Indian rupee appreciated by merely 0.15% to 44.39
levels against the US dollar. Day ahead, market will be lacking momentary triggers in the absence of economic data. However, precious metals are likely to hold onto their gains without heavy movements expected. Investors may be willing to wait till FOMC decision tomorrow.
 
Base Metals
Base metal prices are trading modestly higher. Prices are largely consolidating as investors await Fed’s announcement. Equity markets are also largely consolidating, as most of the Asian equity markets ended largely flat. European equity markets are also trading in green with modest gains. Dollar index is also trading modestly lower and thereby to a certain extent supporting prices. Reserve Bank of India raised both repo and reverse repo rate by 25 bps each given that inflation continues to remain a concern. Australian central bank also raised interest rates by 25 bps. In the evening, there are no major economic data due to be released from US and the equity markets may also continue to consolidate, in absence of any cues. Overall, we expect base metals to continue to consolidate with slight positive bias.

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