Market and product

Gold prices extended overnight gains to move closer towards $1250.ounce. The gains however remain capped ahead of the FOMC policy statement today, where the Fed is not expected to change its monetary policy this time but is would be the tone of the statement that will be watched upon carefully by the market participants.

Data on Tuesday showed orders for U.S. manufactured goods rebounded lower than the expectations in March that might refrain fed from taking hawkish stance given the fact that they have reiterated to keep a data driven approach while deciding the monetary policy. In the light of major event later tonight prices might trade volatile therefore we recommend a range based trading in both the bullion counters for the evening session.

In energy, crude oil prices today continued showing gains with better inventory expectations. As mentioned in our morning report, the industrial data released by API showed downfall in crude stocks along with gasoline and distillates for last week. Seeing the seasonal study, normally the crude stocks this time should show slight injections/ withdrawals while the gasoline and distillates stocks shall continue their downtrend owing to extra demand in the US domestic market. Apart from this, declining US shale oil production level acts as a catalyst for fueling international crude oil prices. For the evening session, we continue with our buy side strategy in crude oil.

NG prices today showed some recovery after posting some significant losses from past two trading sessions. some restricted gains might be witnessed during evening session with the opening of the US markets as the expectations from the inventory data suggests injections for last week. As mentioned before, Bloomberg’s survey suggests around 70 bcf NG injections for last week. A range bound trade in NG is expected for the evening session.

Base metals sector today remained almost cautious ahead of the FOMC meet. Apart from this, surge in Chinese industrial profit in the month of May tried adding bit positivity to the sector seeing some recovery in the country’s economy.

Though, as mentioned in our morning report, data showed profits, but still the metals and mining sector witnessed downfall. The heavy industry and mining sector showed decline of around 16% in profits during the first quarter. Its economy grew at 6.70% in first quarter compared to last year, which was slowest pace in seven years.

Today, most of the Asian market posted loss where Shanghai Composite ended its day having around 0.40% loss. LME inventory data today however was supportive for copper, nickel and aluminum. For the evening session, we recommend buying lead and nickel from lower levels while expect a range bound trade in rest metals.