Commodities trade lackluster on thin holiday volumes :Edelweiss

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Commodity Weekly Perspective

• The yellow metal regained lost ground, with prices recovering till $1995/oz. The pack was underpinned by reports that Japanese government has approved additional stimulus spending worth $29bn, comprising of household subsidies and infrastructure spending. The government expects the stimulus plan to boost Japan’s GDP by 0.7%.
• Meanwhile, Russian ruble resumed the southward journey as oil prices once again lost ground. The country’s finance ministry expects that the economy will shrink by 4% next year if oil prices average around $60/barrel. On outlook, the markets will be deprived of any action, as global participants will remain on the sidelines ahead of the year end potential.
• MCX Gold is expected to continue its up move towards 27400-500 this week. Strong support is 26700 and 26500. MCX Silver is also on uptrend untill it sustains above 36700.
• The broader trajectory in the energy markets remains fragile, as OPEC remains in no mood to alter the output levels in spite of a steep fall in oil prices. On geopolitical side, Syria is willing to participate in “preliminary consultations” in Moscow aimed at restarting peace talks next year to end its civil war, but it is not clear if opposition leaders will agree to show up.
• MCX Crude oil prices have to sustain above 3700 and then 3800 to resume its uptrend. If prices fall and sustain below 3500, we could see new sell off again.
• Base metals are expected to move higher, as China’s central bank is expected to ease liquidity requirements. In this respect, People’s Bank of China may now allow savings held by banks for non-deposit-taking financial institutions to be counted within the banks’ lending base. Under the new method, major financial institutions may no longer need to set aside additional reserves, leaving them with more money to earmark towards lending and investment. But MCX Copper prices continue to slide, if it sustains below 400, there are chances of it being touching its previous lows of 390