COM: Gold, copper, crude oil fall on dollar strength
Spot Gold prices declined almost 1% till 4.30 p.m. IST as strength in the dollar sapped demand for the precious metal as an alternative investment. Gold holdings in the SPDR Gold Trust dropped 0.4% to 1123 metric tons yesterday.
The US Dollar traded around 0.2% higher today and made the yellow metal look unattractive for holders of other currencies. Prices could trade with a negative bias today as strength in the dollar could continue to weigh on the yellow metal ahead of the weekend.
Copper prices fell 1% till 4.30 p.m. IST as China’s central bank took steps to tighten lending. China’s central bank began to roll back its monetary stimulus for an economy which is poised to become the world’s second-biggest this year.
China is mainly trying to reduce the danger of asset-price inflation after a record surge in credit. The People’s Bank of China sold three-month bills yesterday at a higher interest rate for the first time in 19 weeks.
Crude Oil prices declined 0.4% till 4.30 p.m. IST, on concern that investment in commodities could slow after China takes steps to tighten bank lending. Oil prices declined for the first time in 11 trading days yesterday after strength in the dollar weighed on the commodity.
Oil prices are also trading lower as the US Commodity Futures Trading Commission (CFTC) will propose limits next week on how many futures contracts traders can hold to curb energy speculation. Oil prices could face downside pressure on the back of this move.
Outlook
The US is expected to announce economic data on non-farm employment, unemployment rate, average hourly earnings and wholesale inventories today. If the data comes on the negative side then the US dollar could strengthen further and put pressure on dollar-denominated commodities.
Copper prices could trade lower as concerns over tightening of bank lending in China could curb demand for base metals. This along with a strong dollar could put pressure on copper prices. Gold and crude oil prices could take cues from the stronger dollar and may trade with a negative bias.
