Informist, Tuesday, Apr 9, 2024
--Prithvi Finmart's Jain: See MCX gold at 75,000 rupees/10 gm by Dec
--CONTEXT:Prithvi Finmart Director Manoj Jain's comments in interview
--Prithvi Finmart:Gold may fall to 65,000 rupee if no US rate cut 2024
--Prithvi Finmart's Jain: Don't see much downside in gold currently
--Prithvi Finmart Jain: MCX silver may hit 100,000 rupees/kg by Dec
--Prithvi Finmart's Jain: See WTI crude at $94/bbl by June-end
--Prithvi Finmart's Jain: Base metal prices to rise more in coming mos
--Prithvi Finmart's Jain: Copper, aluminium look promising this year
--Prithvi Finmart's Jain: LME copper to hit $9,600/tn in Jun quarter
--Prithvi Finmart's Jain: See LME aluminium at $2,600/tn by June
--Prithvi Finmart's Jain: LME zinc to touch $2,850/tn in Jun quarter
--Prithvi Finmart's Jain: Recovery in China econ aiding base metals
--Prithvi Finmart's Jain: Commodities to be highly volatile this year
--Prithvi Finmart's Jain: No need for India to import wheat as of now
By Sandeep Sinha, J. Navya Sruthi, and Romeo M. Raj
MUMBAI – Prices of base metals, bullion, and crude oil are likely to rise further in 2024 due to the recovery seen in China's economy, expectations of rate cuts by the US Federal Reserve, and geopolitical tensions, said Manoj Kumar Jain, director at brokerage firm Prithvi Finmart.
"Actually, we are not surprised (by the recent rally in gold) because we have already released our buy report on gold in the month of January, and we were targeting $2,350 (per ounce on COMEX) odd levels and even in the domestic market we were targeting 70,000 (rupees per 10 gm) odd levels," Jain told Informist in an interview.
Jain said the firm has scaled up its targets for 2024 due to the recent price rally in bullion, crude oil, and base metals. "We are expecting the rally could further continue in the next two to three quarters," he said. By the end of 2024, gold prices are likely to reach $2,500-$2,550 levels on COMEX and 75,000 rupees per 10 gm on the Multi Commodity Exchange of India, Jain said.
On Monday, the yellow metal touched a new all-time high of $2,372.5 per ounce on COMEX. On the domestic exchange, it hit a new lifetime high of 71,249 rupees per 10 gm today. The reason behind the rally was aggressive buying of physical gold by central banks, geopolitical tensions in West Asia, and rising rate cut hopes by the US Federal Reserve, Jain said. The firm sees the possibility of at least three rate cuts in the US this year.
Similarly, the firm expects crude oil prices to rise to $94 per bbl by the end of June. Increasing hopes of early rate cuts by the US Fed, rising crude oil demand from China and the US, and production cuts by the Organization of the Petroleum Exporting Countries and allies, are likely to drive crude oil prices higher, Jain said.
At the same time, rising crude oil prices will lead to a rise in inflation, which may defer rate cuts in the US beyond this year. In such a scenario, Jain sees gold prices correcting to $2,260 per ounce on COMEX. If this level is breached, and in the worst case, gold prices could fall to $2,100 per ounce once again and 64,000-65,000 rupees per 10 gm on the MCX.
"As of now, I am not expecting any worst case," Jain said. If crude oil prices rise above $92 per bbl, then there is a possibility that the OPEC and allies will ease their output cuts and "there will not be any impact on the rate cut side," Jain said.
When asked about the demand for physical gold amid high prices, Jain said initially there would be a slack in physical gold buying. However, the upcoming marriage and festival season would lead to a surge in demand, he said. Also, there will be recycled gold coming into the market, where people will exchange the old jewellery for new, he added. "So, initially there may be some decline in the physical demand. But gradually it will pick up," Jain said.
"Every time is a good time for buying gold," Jain said. We have seen gold's track record for the last 40–50 years, on a yearly basis, and we observe that gold has always given a positive return due to the geopolitical tensions, depreciation of many global currencies, and inflation continuously supporting gold prices. "I see this momentum will continue for the coming years. For those who missed the rally and want to start the investment in gold, then every time is the right time," he said.
INDUSTRIAL METALS
Jain expects silver prices to reach $35-$36 per ounce on COMEX and above 100,000 rupees per kg on the MCX, by the end of 2024. Developments in the automobile and solar energy sectors and positive cues from base metals are major silver price boosters.
Commenting about base metals, Jain said improving China's economic data and the market’s expectations of early rate cuts by the US Fed are supporting base metals prices. "Copper prices hit around a 14-month high on the London Metal Exchange and prices crossed $9,300 per tn last week. And even the aluminium and zinc prices are also catching the rally of copper," Jain said. For the current year, Jain is bullish on copper and aluminium, due to increased demand from the power sector, especially the green energy sector.
"We are expecting $9,600 per tn for copper on the LME in the next quarter. And for aluminium, we are expecting $2,600 per tn and for zinc $2,800-$2,850 on LME," Jain said. Similarly, on the MCX, the firm has kept a target for copper at 840–850 rupees per kg, zinc at 260 rupees per kg, and aluminium at 245 rupees per kg.
EQUITY MARKETS
With the Indian equity market sustaining at higher levels, Jain said the Indian equity market is behaving totally differently compared to other global markets. The main supporting factor is, we have a stable government at the Centre for two terms and market reports suggest that this government is returning to power for the third term, Jain said.
"The government policy will continue for another five years, which is positive for the market." Due to the US elections in November, the volatility in crude oil, gold, and base metals would definitely increase, Jain said. He expects the volatility to rise from the June quarter.
Despite international reports and domestic experts saying that India might have to import around 1 mln-2 mln tn of wheat, Jain believes that the country is self-sufficient in terms of food grain. "As of now, there is no need to import (wheat) and looking at the better monsoon predictions...La Nina condition will emerge from June onwards. So, I don't think there will be any need for importing wheat," Jain said.
This year's wheat production is normal compared to the previous year's, Jain said. Even though there were some adverse monsoon conditions during March in some areas, the overall production of the food grain crop is good, he said. End
US$1 = 83.31 rupees
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