BLBG: Gold little changed at $1055, may gain if dollar slides
Spot Gold prices hovered around $1,055/oz today, little changed from yesterday’s close. But the yellow metal could advance in later trade due to weakness in the dollar that could raise demand from inventors who are seeking to hedge against further declines in the currency.
The US Federal Reserve is not expected to raise interest rates at next month’s meeting. Hence, in the short-term the dollar could continue to witness downside. This factor could provide support to gold prices.
Copper prices traded lower by 0.4% on the LME till 4.00 p.m. IST as the markets lacked direction and yesterday’s pullback in prices kept the sentiment subdued. Prices were restrained on the upside on the back of a chunky warehouse daily inventory rise, which lifted the total LME inventories to five-month highs.
However, the downside is protected by the current supply worries and recent strong fund buying interest. Currently, copper pries are being pulled in two different directions by weaker-than-expected US housing data and rising global inventories versus concerns that supply could be impacted by South American strikes.
Crude oil prices declined for a second day ahead of an inventory report from the US Energy Department which is expected to show crude oil inventories rose last week. Oil stocks are expected to rise as per market expectations and this factor is putting pressure on prices. Yesterday, the API inventory data from the US indicated that crude oil stockpiles rose last week.
This data too came in as a bearish factor and led oil prices lower. The dollar index posed strength in yesterday’s trading session but it is currently trading on a weaker note. If the Dollar Index continues to remain weak then oil prices will receive downside support even if inventory data is bearish.
Outlook
Crude oil prices are expected to take cues from the inventory report at 8.00 p.m. IST today. This data is expected to show a rise in inventories by 0.9M and could put downside pressure on prices but a weaker dollar could cushion a sharp downside.
Copper prices could continue to trade with a negative bias as there in no economic data release. However, a weaker dollar will provide direction to the red metal. Gold prices could bounce back against yesterday’s closing as the dollar will provide upside support.
