MUMBAI: Commodities futures staged a mild recovery overnight after strong economic data bolstered optimism about recovery in the world's largest economy.
Investors and traders shifted their focus to high-yielding currencies as US dollar snapped winning streak against the basket of currencies.
A weaker US dollar also bolstered the appeal of commodities. Usually, investors buy commodities to hedge against inflation. Apparently, we saw early uptick in most of commodities.
However, some of them have failed to latch on to gains which include gold and other precious metals for instance.
Oil rose by more than $1 a barrel, continuing the previous session's gains after US manufacturing data boosted optimism that the world's largest economy is on the way to recovery.
US crude for March delivery hit $75.44 a barrel, up $1.01, and then fell back to trade at $74.66. Oil advanced the most in four weeks yesterday after the Institute for Supply Management’s factory index rose to a higher-than-anticipated 58.4 from December’s 54.9. European manufacturing increased last month, a separate report showed.
Markets will be focusing on outcome from inventory data from American Petroleum Institute (API) scheduled to be released later today.
US crude oil inventories were expected to have fallen 200,000 barrels last week due to problems offloading at a Texas port.
Distillates stocks may have declined while heating oil demand is expected below normal. Meanwhile, heating demand for natural gas is expected to fall below normal.
Gold prices softened a touch but still hovered near $1,103 per ounce on Tuesday after posting their biggest daily gain in three months in the previous session boosted by an oil rally, US dollar weakness and strong data.
Spot gold inched down 0.1% to $1,103.75 per ounce compared to New York’s notional close of $1,105.30. US gold futures for April delivery were steady at $1,105.00 an ounce on the COMEX division of NYMEX.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust said its holdings stood at 1,111.92 tonnes as of February 1, unchanged from the previous business day.
The world's largest silver-backed exchange-traded fund, the iShares Silver Trust, said its silver holdings stood at 9,355.98 tonnes as of February 1, down 0.3% from the previous business day.
Base metal counters rebounded strongly last night in US after strong manufacturing data bolstered economic recovery prospect.
Copper came off 11-week low. Shanghai copper seen trading sharply higher on Tuesday, after a late turnaround in London copper on firm US manufacturing data that saw the metal end up 0.7%.
Three-month copper on the London Metal Exchange (LME) rose $45.50 to close at $6,791 a tonne on Monday, and extended gains to $6,825 in after-hours trading.
LME copper hit $6,600 a tonne on Monday; it’s lowest since mid November. LME copper last stood at $6,730.
Boosting the economic outlook, the manufacturing sector grew in January at a faster rate than expected, with the index reading at its highest since August 2004.
The weaker US dollar and chance to pick up material 10 to 15% less than recent highs overcame worries about tightening monetary policy after strong purchasing manager data on Monday.
The domestic commodity futures opened today’s session on a mixed note as stronger rupee cut trading advantage that was created by strong global cues.
On MCX, crude oil contract for near-month settlement was last quoting 0.8% stronger at Rs 3,462 a barrel, not far from its early high of Rs 3,470. The contract started the session at Rs 3,444.
MCX Gold for February settlement opened lower at Rs 16,399 per 10 gram. After a brief rise towards Rs 16,475, the contract retraced to current level of Rs 16,472 per 10 grams.
MCX Silver March settlement contract traded almost flat at Rs 26,086 per kg, after having opened the session at Rs 26,051.
Base metal counters continued to trade in the negative zone despite strong global cues. Copper erased most of its previous gains while other metal counters struggled to stay in positive zone.
MCX copper for February settlement traded 1% lower at Rs 313.00 per kg. MCX zinc February contract extended decline and was last quoting 2% lower at Rs 97.70 a kg.
