MCX COMMODITY MARKET NEWS & UPDATES - 03 OCT 2017

Market Testing Value Zone; Overdue for Short-covering Rally - Gold futures finished slightly better on Thursday after hitting a six-week low. The market was supported by a weaker U.S. Dollar, but remained on track to post its biggest monthly loss this year. The market is also in a position to post its third straight weekly decline, but should be able to finish higher for the quarter. The U.S. Dollar closed lower against a basket of currencies for the first time in three days, ending this week’s winning streak. Traders blamed the weakness on end-of-the-quarter position-squaring and profit-taking. Some investors said the Greenback was overextended, driven higher primarily this week by hawkish remarks from Fed Chair Janet Yellen and steep, politically driven selling in the Euro. The Trump Administration’s release of its long-awaited tax reform plan also helped underpin the index, but the lack of follow-through to the upside after an upbeat Final GDP report may have been the catalyst for the start of the selling on Thursday.

Brent, WTI Divergence Could Be Indicating Short-term Top - U.S. West Texas Intermediate and international-benchmark crude oil finished lower on Thursday, giving up earlier gains that sent WTI prices to their highest level since April 19. Brent crude posted an intraday rally but failed to make a new high for the week. Earlier gains were spurred by tension around northern Iraq following the Kurdistan region’s vote in favor of independence. On Thursday, Turkey promised to deal only with the Iraqi government on crude, “restricting oil export” operations to Baghdad, the office of Iraqi Prime Minister Haider al-Abadi said. The referendum vote also prompted Turkey to threaten to close the region’s oil pipeline. Traders said that shutting the pipeline could mean 500,000 to 550,000 barrels per day of crude oil may not reach the market. Analysts also put the chances of shutting down the pipeline linking northern Iraq and Ceyhan in Turkey at about 20 percent.

Base metals prices on the London Metal Exchange mostly edged higher, with zinc and lead continuing to put in a strong performance - The three-month zinc price was most recently trading at $3,167 per tonne as tight supply continued to support prices following 16,950 tonnes freshly cancelled this morning, with the majority in Antwerp. Both zinc and lead spreads are now in backwardation with zinc’s cash/three-month spread at $42.50 per tonne and lead’s at $4 per tonne backwardation. London copper futures traded flat on Monday in slow trading, with market participants in top metals consumer China away this week for the National Day break. China’s manufacturing activity grew at the fastest pace since 2012 in September as factories cranked up output to take advantage of strong demand and high prices, easing worries of a slowdown before a key political meeting next month, data released on Saturday showed. Chinese steelmakers and aluminium smelters are closing some production starting next month to meet strict air quality standards for the winter.

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