Sage Investment Club

Bullion, metals and key commodity prices are expected to remain volatile this year and value chain participants should be vigilant with a clear cut risk management policy.Dwelling on the Bullion and metals outlook at a businessline Agri & Commodity Summit, Naveen Mathur, Director (Commodity and CUrrency), Anand Rathi Stock Broking, said after a rough and tricky patch last year, commodity prices are not expected to cool off much with no sign of end to Russia invasion on Ukraine and central banks’ fight against inflation.The US Fed has already hiked interest rates by 450 bps and all dollar-denominated commodities will fall as they have inverse co-relation with dollar, he said.The economies across the globe face fresh problems with expectation of China — one of the largest consumer and producers of metals — going to see a slowdown and the West entering a recessionary situation. It will be a volatile year for commodities and will be in a range-bound trading.Narinder Wadhwa, National President, the Commodity Participants’ Association of India, said despite India being the largest consumer of most commodities it is still a price-taker rather than being a price-setter. The government has taken a few steps through the Gift City in Gujarat but it is a long-drawn process, he said.Kapil Dev, Chief Business Officer, NCDEX, said the exchange will focus on developing the steel derivative contract as it is going to be one of the highest volatile commodities with huge demand on back of government’s infra push.While Indian steel prices have just 20 per cent correlation with international market, NCDEX has one of the most liquid contract for hedging. Mathur said that with the US Fed still remaining hawkish gold prices should be range bound between $1,825 and $1,830. On MCX, it will trade in a ₹55,550-60,000 per 10 grams range. The central banks are not expected to turn dovish either this year or 2024. Investors should have to put strict stop-loss both in equity and commodity derivative market, he said. “We usually see people trying to average their investment when prices fall instead of cutting loss,” he said.The fear of recession in the US and Europe is more dangerous than the recession itself as people will stop investment and venturing on new ideas, said Wadhwa. Corporates should work on their hediging plans as the geopolitical concern, supply chain disruption, rise in freight rate, risk on weather condition and labour shortage are here to stay, said Dev.The Budget should focus on abolishing commodity transaction tax and facilitate the spot and futures market linkage for better price discovery, said Wadhwa. The view was supported by Mathur. This was since the country was the costliest as regards commodities transaction, they pointed out.SHARE
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