Economic data released from the Euro Zone indicated that French prelim non-farm payrolls increased as expected by 0.2 percent in the fourth quarter of 2010. German CPI index declined 0.4 percent in January as against the decline of 0.5 percent in the prior month. While German WPI index rose 1.2 percent in January more than forecast of 0.9 percent rise. The index had increased 1.8 percent in the month of December. Economic data from the UK showed that the country’s Producer Price Index (PPI) increased 1.7 percent in January 2011 as against expectations of 1.3 percent. The index had increased by 3.4 percent in the previous month. UK’s PPI output increased 1 percent in January as against 0.5 percent in December and forecast of 0.4 percent. Spot Gold prices were trading lower by 0.2 percent mainly on the back of stronger dollar today. But turmoil in Egypt and mixed sentiments in the global financial markets protected sharp decline in prices today. The yellow metal prices were hovering around $1358.64/oz till 4.00 pm IST. On the MCX, the yellow metal prices were trading on a flat note at `20,411/10 gm around the same time. Depreciation in the Indian Rupee cushioned sharp decline on domestic bourses today. Re-emergence of unrest in Egypt acted as a negative factor for metal prices today. Additionally, strength in the US dollar and choppy sentiments in the global financial markets also exerted pressure on the base metal prices. Nickel was the worst performer of the day as the metal declined more than 1.5 percent on the LME today. Prices touched an intra-day low of $27,625/tonne till 4.00 pm IST today. As the Egyptian President Hosni Mubarak refused to step down immediately, this intensified unrest in Egypt today. This lifted crude oil prices on the international markets mainly on the back of expected supply concerns from Suez Canal. But sharp gains were capped due to strength in the US dollar and mixed sentiments in the global equity markets. Nymex crude oil prices were trading up 0.2 percent and were hovering around $86.80/bbl till 4.00 pm IST. Outlook In the evening session, we expect base metals to trade lower, mainly taking cues from unrest in Egypt coupled with strength in the US dollar today. Crude oil prices are expected to witness gains over expected supply concerns. But stronger dollar may cap sharp rise in oil prices in the evening session today. Ongoing political tension in Egypt will lead to rise in safe-haven demand for gold. Additionally, mixed market sentiment will also make investors to flock towards gold today.

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