Spot Gold fell to around $780 an ounce as the global equity markets showed some recovery. The drop down in inflationary figures is also pulling down the prices. There is a lack of demand for the metal in the global markets. Prices are tumbling as funds liquidated gold holdings to cover losses on other markets. The recent dollar strength has tended to weigh on gold pretty heavily," said Standard Chartered analyst Daniel Smith. The dollar remains the underlying driver for gold. The dollar firmed a touch against the euro, as turmoil on the financial markets boosted the U.S. currency's appeal as a haven from risk.
Crude Oil demonstrated some recovery in the night but fell again in the morning trading session testing the levels of $70.69 a barrel. The news of cutting the production levels by the OPEC in November did not affect the market which already made a low of $68.57 a barrel yesterday. Natural Gas is showing an increase along with stronger cash gas amid cooler weather in the Northeast and Midwest and with slightly stronger crude. There has been shut-in Gulf of Mexico production from recent storms, but others said an overall slump in energy demand amid widespread recession fears and big gains in onshore production should help ease worries about having enough supply for winter.
Base metals have been falling consistently due to lack of global demand. The Housing starts and building permits data also declined giving a bearish outlook for the metal. Base Metals further fell after Federal Reserve reported the biggest drop of 2.8% in U.S. industrial production since December 1974. Nickel and zinc prices are at or close to the marginal cost of production. Only when global growth slowed to 2 percent and below did demand for copper, aluminum and zinc decline, in 1982, from 1990 to 1992 and in 2001, according to Barclays analystthe demand for red metal is weakening particularly from the U.S. and Europe chief executive officer of Codelco, the world's largest copper producer, said this week. U.S. industrial production in September fell 2.8 percent, the most since December 1974, according to the Federal Reserve.
