MUMBAI: Today is a news-heavy day for commodities. Key data is expected to flow in from the US, including the FOMC meet outcome. The obvious result is reflected in the volatile trade so far.
For the last two sessions, crude oil prices have remained depressed. The trend persists even today. Industrial metals have also limped in early session as the US dollar strengthened against the euro. Meanwhile, gold finds favour this morning as buying emerged at lower levels.
The markets will be keenly watching the outcome from the FOMC meet, apart from the content of report. The US Federal Reserve is expected to hold benchmark rates near zero on Tuesday and reiterate its pledge to keep them low for an “extended period” due to the weak job market and nagging doubts about the economic rebound.
Crude oil extended its decline for the second consecutive day. US crude oil futures were steady below $80 a barrel, after falling 1.8% to the lowest close in two weeks a day earlier as the US dollar remained strong.
Nymex crude for April delivery was down 14 cents at $79.78 a barrel, after settling down $1.44 at $79.80 a day earlier. It fell as low as $79.13 on Monday, the lowest since March 2.
The Organisation of Petroleum Exporting Countries (OPEC) may not need to adjust output policy this year if the oil market remains stable. Domestic crude stockpiles likely rose last week as markets await industry and government inventory reports.
Gold prices inched up, underpinned by ongoing concerns over Europe's debt problems, but rises were capped with investors wary about a possible monetary tightening, ahead of a rate decision.
Spot gold was up 0.4% at $1,113.15 an ounce, compared to New York 's notional close of $1,108.10. US gold futures for April delivery rose 0.4% to $1,109.80 per ounce, compared with $1,105.40 on the COMEX division of the NYMEX.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,115.51 tonnes as of March 15, unchanged from the previous business day.
Shanghai copper seen trending lower this morning following losses in London in the previous session after the US dollar gained ahead of a US Federal Reserve meeting due later in the day.
Three-month copper on the London Metal Exchange (LME) fell 2.1% to $7,310 on Monday, and dipped to a near two-week low of $7,270. In late trade, copper extended losses to $7,296, some $86 down from where the LME traded when Shanghai closed, suggesting a softer start to the Chinese market. Copper has since recovered and was last quoting $15 higher at $7,360 a tonne.
Worries that China's attempts to quell inflation could also cut demand for metals, or drive commodity speculators using cheap loans to cash in positions if interest rates rise, has prompted liquidation in the past few days.
But sentiment was underpinned by another fall in LME copper stocks, down for the ninth day running, and their longest run of declines since an extended period of stock draws in the second quarter of last year.
Domestic commodity counters opened the session on a softer note. Market participation is likely to remain tepid as today being a state holiday for the Hindu new year. However, the domestic market would continue to track trends in international markets. Crude oil prices slid tracking overseas markets. MCX crude oil futures for March settlement moved between Rs 3,644 and Rs 3,628, before retracing to the current level of Rs 3,638 per barrel.
MCX Gold for April settlement last quoted at Rs 16,592 per 10 grams after moving between Rs 16,618 and Rs 16,554 per 10 gram. MCX Silver May settlement contract traded 0.6% higher at Rs 26,835 per kg, after having opened the session at Rs 26,820.
Base metal counters recovered on a bargain buying. MCX copper for April settlement was last quoting 0.5% higher at Rs 335.55 per kg, after opening the session at Rs 334.50. MCX zinc March contract added 0.4% to trade at Rs 103.75 per kg.
