MCX COMMODITY MORNING MARKET UPDATES - 31 OCT 2017

Gold steadied on Monday ahead of a series of central bank meetings and President Donald Trump's expected announcement of the next Federal Reserve chair. The U.S. central bank kicks off a two-day policy meeting on Tuesday, while the Bank of Japan and Bank of England also meet this week over interest rate policy. Gold is highly sensitive to rising rates, which increase the opportunity cost of holding non-yielding bullion. Tighter U.S. policy also boosts the dollar, in which the metal is priced. Spot gold was at $1,272.30 an ounce, little changed from its late Friday level but well off that session's three-week low of $1,263.35. U.S. gold futures for December delivery were up 0.1 percent at $1,273.10 an ounce. The metal is facing a slew of potential risks this week, including the U.S. monetary policy meeting and Fed chair announcement, closely watched payrolls data on Friday and ongoing unrest over Spain's Catalonia region. While the dollar index has taken a step lower on Monday, it remains close to its highest since mid-July. Fed governor Jerome Powell, considered a moderate, is widely tipped to take over from Janet Yellen when she steps down as Fed chair in February. Trump has said he has been considering both Powell and Stanford University economist John Taylor for the post and has also not ruled out re-nominating Yellen.

Hedge funds have added to bullish positions in oil and most refined products even as prices hit their highest since 2015, in a sign investors expect prices to move into a higher range. Brent oil held above $60 a barrel on Monday, near its highest since mid-2015, on expectations OPEC-led production cuts would be extended beyond March although rising Iraqi exports put a lid on prices. Hedge funds and other money managers had accumulated bullish long positions in crude, gasoline and heating oil totalling 1.189 billion barrels by Oct. 24, according to regulatory and exchange data. Portfolio managers have increased long positions in the five main petroleum contracts by almost 374 million barrels (46 percent) since the end of June and the number of paper barrels now comfortably exceeds the previous peak set in February. From a pure positioning perspective, the concentration of long positions has become a significant source of downside risk to prices in the event funds attempt to realise some profits. The Organization of the Petroleum Exporting Countries plus Russia and nine other producers agreed to cut 1.8 million barrels per day (bpd) from January 2016 to clear a supply glut. The pact, already renewed once, now runs to March 2018, but Saudi Arabia and Russia, who are leading the effort, have voiced support to for a further extension.

Copper rose on Monday, pulling away from the previous session’s two-week low as a retreat in the dollar after its biggest one-week gain this year tempted buyers back to the metal. Copper, chiefly used in construction, slid more than 2 percent on Friday to a low of $6,782.50, its weakest since Oct. 11. London Metal Exchange copper ended the day up 0.5 percent at $6,867 a tonne. The dollar slipped on Monday after its biggest weekly rise this year, while world stocks hit another record high as European shares were lifted by easing concerns over the political crisis in Spain. Elsewhere, Glencore lowered its production forecast for copper, zinc and coal on Monday, citing operational difficulties, maintenance and end-of-mine-life declines. On-warrant copper inventories available to the market in LME-registered warehouses fell another 2,300 tonnes to 160,950 tonnes, down 30 percent from the start of October and the lowest in six weeks. edge funds and money managers in the week to Oct. 24 raised their net long positions in copper by 1,026 contracts to 108,739 contracts, a six-week high, U.S. Commodity Futures Trading Commission data showed on Friday.

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