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CAPITALSTARS – MCX COMMODITY MORNING MARKET NEWS UPDATES – 12 SEP 2018

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BULLION:-

Gold at COMEX continued to trade below $1200/Oz with a downward pressure as the likelihood that the Federal Reserve will announce and implement an interest rate hike on September 27 at the end of this month’s FOMC meeting, traders and investors are beginning to focus on what comes after that. Currently, the CME’s FedWatch tool predicts a 99% probability of a rate hike this month, followed by a 60% probability that the Fed will implement another rate hike in December. This action could continue to weigh heavily on gold prices as higher interest rates will certainly be supportive of the U.S. dollar. Last week’s jobs report is certainly supportive of a rate increase this month. Concerns continue to grow as the United States and China continue to be deeply immersed in a trade dispute that seems more and more like it will become a full-blown trade war. As long as there is a real possibility that the trade dispute will become a trade war, we could see the U.S. dollar strength continue and the Chinese yuan weaken. On the other hand, MCX gold which supposed to trade in-line with the COMEX gold, discounting the USDINR movement. Rupee weakened as much as 1% on Monday which sent MCX gold prices to near 3 months high. This year Rupee has weakened around 14%, which has changed gold picture completely at MCX. COMEX gold has dropped around 12% this year and our MCX gold has surged more than 5%.

METALS:-

Base metals were trading mixed on Tuesday morning as an intensifying trade dispute between the United States and China raised concerns over demand for industrial metals. China will respond if the United States takes any new steps on trade, the foreign ministry said on Monday, after U.S. President Donald Trump warned he was ready to slap tariffs on virtually all Chinese imports into the United States. Trump said on Friday he was ready to levy additional taxes on practically all Chinese imports, threatening duties on $267 billion of goods over and above planned tariffs on $200 billion of Chinese products. Wood Mackenzie estimates the expansion of the tariff list could raise the impact to around 1 percent of total Chinese copper demand, as many copper intensive goods are included in the extended list. China is the world’s largest consumer of copper, accounting for nearly half of global demand estimated at about 24 million tonnes this year. China’s copper imports fell 6.7 percent from a month ago to 420,000 tonnes in August, data showed.

ENERGY:-

Oil was steady on Tuesday, supported by looming U.S. sanctions against Iran’s petroleum industry. But prices were capped by signs that increased supplies by other major producers, including the United States and Saudi Arabia, could make up for the disruptions from Iran. Washington is putting pressure on other countries to also cut Iran imports, with close allies like South Korea and Japan, but also India, showing signs of falling in line. US Energy Secretary Rick Perry met with Saudi Energy Minister Khalid al-Falih on Monday in Washington, the US Energy Department said, as the Trump administration encourages big oil-producing countries to keep output high ahead of the renewed sanctions. Perry will also meet with Russian Energy Minister Alexander Novak on Thursday in Moscow. Russia, US and Saudi Arabia are the world’s three biggest oil producers by far, meeting around a third of the world’s almost 100 million barrels per day (bpd) of daily crude consumption. Combined output by these three producers has risen by 3.8 million bpd since Sept. 2014, more than the peak 3 million bpd Iran has managed during the last three years. With Middle East crude markets tightening because of the US sanctions against Iran, many Asian refiners are seeking alternative supplies, with South Korean imports of US crude likely hitting a record in November. At the same time, American oil producers are seeking new buyers for crude they used to sell to China before orders virtually dried up because of the trade disputes between Washington and Beijing.

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