Commodities Wrap on August 25: Nickel, aluminium gain; gold, silver, oil take a breather

"On the lower end, the 20-day EMA (Rs 47,240) should be supportive followed by support near Rs 47,000. If the Rs 47,000 level fails to hold, the price might test key support at the Rs 46,750-46,600 zone. On the momentum front, RSI has moved above the neutral zone (50) at 54 suggesting a sideways to higher trend. So, for the day price is expected to move in the range of Rs 47,240-47,800 with sideways bias. Only close above Rs 47,800 would bring fresh buying interest in gold futures,"

Globally, spot gold tumbled below the psychological level of $1,800 to trade over half a percent lower at $1,797. Silver also slipped half a percent to trade at $23.77.

"Spot Gold prices remained under pressure as the Dollar rose ahead of Powell's speech at the Fed's annual economic symposium. However, the widening impact of the pandemic might continue to levy some support to the safe-haven asset Gold," said Prathamesh Mallya, AVP- Research, Angel Broking.

In the oil market, US WTI oil slumped 0.7 percent spurred by the loss of a quarter of Mexico's production and signs that China, the world's biggest importer, has curbed a recent coronavirus outbreak.

Benchmark Brent crude futures were down 0.14 percent near the $70.98 per barrel mark. The contract had risen about 8 percent over the previous two days, erasing most of the slump from a seven-day losing streak.

The dollar index -- which gauges the greenback against six currencies -- was last trading at 92.93, up 0.12 percent, denting gold's appeal for those holding other currencies. The rupee quoted 0.08 percent higher at 74.25 against the dollar.

"The dollar index has taken support from record gains in the US equities. We expect the dollar index to remain volatile, and hold its key support of 92.40... A recovery in domestic equities and the government's plans to monetise assets have supported the rupee," said Manoj Kumar Jain, Director-Head of Commodity Research, Prithvi Finmart.

On Tuesday, most industrial metals on the LME as well as the MCX ended higher as the widening impact of the pandemic lowered expectation of any early tightening of the monetary policy by the US Federal Reserve.

"Global central banks infusing liquidity in order to counter the pandemic led economic slowdown helped the Base metals recover from the record lows witnessed in the early months of 2020. However, the Federal Reserve officials hinted towards withdrawing the stimulus measures in the policy meeting held in July’21 following the solid recovery in the US economy which has kept the industrial metals under pressure," Mallya said.

Aluminium and copper futures surged over half a percent to trade at Rs 208 and Rs 248, respectively. Lead rose marginally to trade at Rs 179.30.

"On Tuesday, Copper ended higher by 1.1 percent to close at $9376 per tonne as hopes over delay in tapering of the monetary policy by US FED supported prices. Moreover, the expectation of increased global demand for industrial metals with the shift towards a low carbon environment supported market sentiments. Investors might remain cautious ahead of the US central bank symposium scheduled later in the week for cues on the asset tapering timeline," Mallya added.

Nickel was the top gainer of the day, rising almost one percent to trade at Rs 1,445. Zinc also rose over half a percent to trade at Rs 248. Rubber and Natural Gas futures were trading marginally higher.  

Cottonseed oilcake for delivery in January was trading over a percent lower on Wednesday. Similarly, the crude palm oil for delivery in August was down 1 percent too.

Castor Seeds were trading over half a percent higher whereas Mustard Seeds were marginally lower.

Guar Seeds rose over 6 percent tracking firm physical market trends as traders raised their bets. Chana was over half a percent higher.

Soybean futures were trading over 6 percent lower while Soy Oil was over half a percent higher.