AP: Gold, copper, crude oil declines on firmer dollar
Spot Gold prices fell 0.6% till 4.15 p.m. IST for the first time this week as a strength in the dollar prompted investors to sell the yellow metal after it reached a record. Profit-booking after a brief rally also put prices under pressure but the trend remains up as a rise in investment demand from central bankers is bullish for gold. Sri Lanka purchased 10 metric tons from the International Monetary Fund (IMF) for around $375 million. The sale to Sri Lanka was the IMF’s third sale in recent weeks to a central bank.
Copper prices declined more than 1% till 4.15 p.m. IST as risk aversion in the financial markets led to lower demand for higher-yielding and riskier investment assets, which drove the dollar higher. A stronger dollar made base metals look expensive for holders of other currencies. Risk aversion came in after concerns of a government-linked debt default in Dubai. On the fundamental front, total inventories on the LME touched a record high near 6.1 million tonnes. This is bearish for base metals as rising stocks underlined waning physical demand at the end of the year.
Crude Oil prices slumped 1% till 4.15 p.m. IST on the back of a firmer dollar and as investors sold ahead of the US Thanksgiving holiday. Prices also came under pressure after the US Energy Department said that crude oil inventories rose. Floor trading at Nymex will be closed today because of Thanksgiving holiday but electronic trading will continue through the holiday.
Outlook
The US markets remain closed on account of Thanksgiving holiday today. There will be no economic data release from the US today and Gold, Copper and Crude oil will take cues from the movement in the dollar. We expect the Dollar Index to strengthen as traders may liquidate their positions from riskier investments ahead of the long holiday weekend and that will increase the demand for the dollar. A stronger dollar could put downside pressure on Gold, Copper and Crude oil prices. Crude oil prices could decline sharply as rising inventories will act as a bearish factor.
