Worsening US-China trade war situations, intensifying geopolitical tensions and a moderating economic environment are expected to push global commodity prices lower despite some bullish fundamentals — and even though monetary easing by central banks remains a key theme for rest of the calendar year, it may have only limited upside impact.
All these developments have sent crude oil to an 11 percent decline in August, Copper prices are near two-year lows while zinc is at 13-month lows. In the precious metals space, gold has hit a six-year high globally and is at an all-time high in India.
So how does one read into the current scenario and is it a good time to invest or sit back and wait? Or should one cut losses or go all in? To answer these questions
CNBC-TV18 spoke with commodity experts T Gnansekar of Commtrendz Research, Abhishek Bansal, founder, ABans Group and Kunal Shah, Nirmal Bang Commodities.
Experts are of the view that it is time to buy gold, sell crude oil and metals can see consolidation. They believe agricultural commodities like pluses and edible oil can also be a buying opportunity.
Gnansekar is of the belief that the gradual uptrend in gold started way back in 2016 on the back of Brexit concerns. “I am convinced of the sustainability of this trend in gold prices. There are lot of factors which can drive gold prices higher, most important the US Fed which is in dovish mode and [US] President [Donald] Trump is determined to ensure that Fed cuts rates and keeps dollar lower.
"So a weaker dollar will help gold prices,” said Gnansekar.
However, there could be corrections and retracements from time to time but the overall trend is up, he added.
Talking about gold price levels, Gnansekar said the upside is quite open to $1,650 per ounce by end of the year but $1,700 per ounce is also a possibility.
On the downside it is unlikely to go below $1,400 per ounce. Domestically, Rs 35,000 per 10 grams is a strong base in MCX and Rs 40,000-42,000 per 10 grams is the price one can expect going forward.
According to Bansal, gold looks very positive even though it has rallied almost 10 percent in the last couple of months but the market may not correct too much. Although it may consolidated near-term, gold is likely to go up further.
Moreover, with the trade war between US and China intensifying, Chinese currency depreciating propelled gold prices. Meanwhile, cutting of interest rates by Fed helped upward movement of gold price, said Bansal.
Shah is of the view that one could see a small correction in gold and silver prices but eventually, since trade war is unlikely to subside immediately and in a scenario where growth is slowing, global bond yields are likely to fall further, it is possible to see a further upside for gold and silver.“On a conservative basis, we see another $50 per ounce spike in gold in August. We are eyeing levels of $1,550 per ounce on the CME.”