MF’s likely to foray into commodities, gold at 6 month highs & base metals to trade lower this quarter

29th Dec – 04th Jan

1. Mutual Funds entry into commodities looks certain as SEBI allows Custodial Service

January 03, 2019

The participation of institutional investors, including mutual funds, in the commodities segment looks certain after markets regulator SEBI has allowed custodial services. Existing custodians will be allowed to add commodities as an asset class and provide physical delivery of both the securities and commodities.

Source: Economic Times

2. Base metals may remain lower this quarter post US-China talks also

January 04, 2019

Base metals traders are closely watch US-China talks. Both held further talks over the phone on December 29 and continued to resolve issues early next week. But experts believe that base metals prices are unlikely to go up unless there is some development in real terms. Primarily, there is a fear of a global slowdown in 2019. Chinese manufacturing contracted for the first time in December 2018 after 17 months, which gives a hint as to how the marketswould react further.

Source: Economic Times

3. Gold near $1300 per ounce over sell-off in equities and safe haven appeal

January 03, 2019

Gold prices rose over a sharp drop in the Dollar Index and Equities. The U.S. dollar index dropped as the yen jumped up on safe haven buying that sent treasuries higher and sent the US equities over 2% lower on additional fears about slowing economic growth. In the last quarter of 2018, sentiment for gold has changed with global growth concerns and US Federal Reserve view ending the higher interest rate cycle soon supported the precious metal. Global uncertainty is helping gold, however, given the current and emerging circumstances, the upside price movement will be real but limited.

Source: Business Line

4. Gold at six months high over US equity sell off

January 02, 2019

Gold futures on the COMEX division of the New York Mercantile Exchange rose for the second consecutive session of New Year as equities plunged and the U.S. dollar weakened. Gold touched its highest levels in more than six months on this week as the sell triggered in US equities over weakening global markets prompted safe-haven flows into the bullion. US equities entered 2019 with valuations below the historical averages.

Source: Reuters

5. Aluminium dropped to 20 months low

January 03, 2019

Aluminium prices dropped to their lowest level in 20 months last week after the US announced to lift sanctions on Russian producer Rusal. It could increase supply in the market which is suffering from a slowdown in global economic growth.As global aluminium prices are decreasing, domestic producers such as Hindalco, Vedanta and Nalco are facing challenges and waiting for relief in terms of increasing import duty from 2.5% on scrap and 7.5% primary aluminium to 10% on both. India imports nearly 40% of its domestic aluminium consumption and was importing nearly 1.4 million tonnes during year 2017.

Source: Live Mint

6. The government is giving final touches to the mandatory hallmarking of jewellery

December 31, 2018

India annually consumes 800-850 tonnes of gold and rural India accounts for 60 percent of the country's gold consumption. Many small jewellers in towns and rural areas keep hallmarked jewelry along with non-hallmarked jewelry. Strict hallmarking policy of jewelry will ensure credibility of jewellers apart from increasing the faith of consumers and synchronizing the jewelry industry across the nation.

Source: Business Standard

7. Lower commodities prices, Indian currency to recover

December 31, 2018

The recent fall in crude oil prices—on the back of global slowdown concerns—have arrested the fall of the rupee. The slight improvement in the past three months has primarily been led by the strengthening of the rupee, which climbed to the green zone in November, having stayed in the red for the preceding four months. India’s trade balance looks less threatening now, although slow export growth and steady import growth means that our external vulnerabilities still remain.

Source: Live Mint

8. Indian Rupee strengthens as dollar index declined on poor economic data

January 04, 2019

The Indian rupee strengthened this week marginally against the US dollar, tracking gains in other Asian currencies as the Dollar Index fell on weak US manufacturing data. US manufacturing plunged by the most since the 2008 recession a day after Apple cut its revenue outlook, fuelling concerns that the trade war with China is taking a bigger-than-expected toll on economic growth.

Source: Live Mint