Spot Gold prices gained more than 1.5% till 4.15 p.m. IST and hovered above $1110/oz levels today as weakness in the dollar supported an upside. Concerns over economic growth in the US have re-emerged as markets do not expect an immediate hike in interest rates as the economic condition still remains fragile. This factor led to weakening in the dollar and made the yellow-metal look attractive for holders of other currencies.
Copper prices gained more than 1% till 4.15 p.m. IST as a weaker dollar coupled with upbeat Chinese economic data supported an upside. Chinese manufacturing expanded by the most in five years in December. This raised expectations that economic growth in China could gain more than 10%. Purchasing Managers Index in China rose to a seasonally adjusted 56.1. Though this data was positive, it raised concerns over inflationary pressures. Copper inventories on the LME gained 75 tonnes to touch 502,400 tonnes today. Industrial action in Chile is also added upside support to copper prices.
Crude Oil prices touched a high above $81/bbl today as freezing weather in the US and a weaker dollar pushed prices higher. The Climate Prediction Center in the US has forecast below normal temperatures across the eastern half of the US tomorrow through 13th January. The northeast region consumes around four-fifths of the country’s heating oil. Freezing weather in the region could boost fuel demand. China’s manufacturing data could also add to further upside in oil prices as the country is the world’s second-largest energy consumer.
Outlook
The US is expected to announce economic data on ISM manufacturing, construction spending and manufacturing prices today. The data is expected to come on the mixed side. US economic growth is still under question as a dismal job market, crippled real estate and poor situation of banks could hurt economic growth in the US. Consumer credit outstanding still stands at $2.5 trillion and this still remains a concern. The dollar could come under pressure if concerns over US economic recovery hurt prospects of an early rise in interest rates. This could support an upside in Gold, Copper and Crude Oil prices today.
