COM; Gold, copper and crude oil trade with negative bias
Gold prices traded with a negative bias today and touched a low of Rs16,974 on the MCX Feb contract as selling pressure reeled in. Prices on the MCX came under pressure as against the Spot Gold levels as depreciation in the Rupee capped the gains. Spot Gold prices also traded with a downward bias as even slight strength in the dollar is putting pressure on the yellow metal.
Copper prices declined 0.2% on the LME till 5.00 p.m. IST and touched a low of $6832 on the LME today. Inventories of the red metal gained 1075 tonnes and touched 467150 tonnes. If the dollar strengthens then copper prices could face further downside pressure. Base metals will continue to take cues from US economic data and the movement in the dollar.
But there is no economic data release from the US front today. Base metals will take cues from the dollar, movement in equities and the LME inventories. As year-end trade begins to surface, investors may book profits and base metals may remain vulnerable to further price moves in both directions.
Crude Oil prices also traded with a negative bias on speculation that the global economy’s uneven recovery from recession could slow growth in demand for fuel and energy. Prices came under pressure after the Tankan business confidence in Japan, the world’s third-largest oil consumer, posted its smallest improvement this year.
Outlook
Gold prices could take cues from the movement in the dollar. Strength in the dollar could put the yellow metal under pressure. If risk aversion sets in the financial markets then demand for higher-yielding and riskier investment assets could decline. Gold prices could trade with a negative bias today. Oil prices could continue to trade with a negative bias as demand worries in the US, the world’s largest oil consumer continues to raise concerns.
Demand figures reported by the EIA were unable to support the case for prices to move higher, showing consumption in the US is still failing to recover despite the economic upturn. Copper prices are also expected to face downside pressure if the dollar strengthens and rising inventories too pose a bearish scenario.
