Bullions remained range bound with spot gold facing stiff resistance at $850 an ounce. Weakness in the equity markets typically fuels buying of gold. European shares slipped, breaking a two-day winning streak, as the euphoria over bold government action to arrest the financial sector meltdown dissipated and recession fears took centre stage. Volatile gold prices blunted buying appetite in India, the world's largest consumer, ahead of Diwali, the Hindu festival of lights, at the end of October. Investors, who normally take profits when prices soar, were also on the sidelines as they are waiting because they think the market will rise even further because of the global crisis.
Crude Oil slipped to $77 a barrel on fears of global recession. Slumping demand in the United States and other big consuming nations and the mounting financial crisis have dragged crude off record peaks over $147 a barrel hit in July. Tropical Storm Omar was likely to reach hurricane strength in the Caribbean Sea as early as Tuesday night, which can provide some support to crude prices. Tropical storm Omar disrupted activity at Venezuela's 200,000 barrel-per-day Puerto La Cruz refinery on Tuesday, knocking out power to some units and forcing authorities to suspend tankers' movements at the facility's port, the state oil company said. But U.S. crude oil inventories probably rose for a third week last week, up 1.9 million barrels, Gasoline inventories were predicted up 2.9 million barrels with distillates, which include heating oil and diesel, adding 600,000 barrels as expanded Reuters poll showed.
Base metals tumbled alongside equities as fears over the global economic outlook and demand for industrial commodities dominated sentiment. Expectations of weaker global demand for metals were reinforced after the world's largest copper producer Codelco said the premium for refined copper in Europe will be lower around $80 a tonne in 2009-this probably support prices of copper. Adding to negative sentiment was global miner Rio Tinto, warning of slowing Chinese demand for commodities because of the global crisis. The weak backdrop of aluminium was highlighted after Aluminum Corp of China Ltd (Chalco) said it is temporarily shutting around 1 million tonnes of alumina capacity at its Shandong plant due to low prices. Nickel was at $12,400 from $12,800 a tonne at the close on Tuesday whereas lead at $1,565 from $1,640 and zinc at $1,400 from $1,410 a tonne.
