MUMBAI: As expected US Federal Reserve maintained its softer rate policy stance aimed at pump priming sagging economy, boosted demand for risky assets including commodities and equities.
Currency markets have also supported to gains in commodities, as the US dollar retraced lower against the basket of six-currencies. Commodity markets received a boost from the convincing statement made by Federal Reserve this time around.
The statement reads as: the US labour market was "stabilising," a view that was more upbeat than at the last meeting in late January, when it said the labour market was "abating."
Meanwhile, commodity markets are now looking for fresh cues. Later in the evening the US Energy Information Administration (EIA) will be releasing weekly inventory data besides other key economic data that will influence future trends in commodity prices.
US crude oil futures extended gains, adding to a 2.4% rise the previous day made on weakness in the US dollar, and as OPEC ministers planned to keep oil output cuts in place at a meeting Wednesday.
NYMEX crude for April delivery was up 45 cents at $82.15 a barrel, after settling up $1.90 at $81.70 a day earlier. It fell as low as $79.13 on Monday, the lowest since March 2.
Oil demand is picking up and that could mean OPEC does not need to take any further action on supply this year, the group's biggest producer said as ministers prepared to rubber stamp existing outpaced targets.
Gold rose further this morning, after having gained more than 1% the previous day as a US Federal Reserve decision to hold interest rates unchanged burnished the metal's investment appeal.
Spot gold at $1,127.65 an ounce, up $2.95 from New York’s notional close on Tuesday, when it hit an intraday high of $1,128.45, its strongest since March 8.
US gold futures for April delivery rose $4.5 an ounce to $1,127.00 after gaining 1.5% in previous session on fund buying and a rally in oil prices.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,115.51 tonnes as of March 16, unchanged from the previous business day.
Base metal counters extended gains last night as softer US dollar and higher equities raised optimism. Shanghai copper seen trending higher as well, chasing a 2% rally in London.
Three-month copper on the London Metal Exchange (LME) rose 1.2% to $7,400 on Tuesday, and extended gains to $7,425 in late trade.
The contract last traded at $7,500 a tonne, up $60. LME copper stocks continued their run of declines. Stocks have come off more than 24,000 tonnes since March 1 at 528,050 tonnes to their lowest since the middle of January.
Domestic commodity counters moved in tandem with the global markets. Also, with rupee markets returning to trade there was some cap to price gain in initial trades.
Rupee strengthened against the US dollar and, hence, the commodity prices were kept under check. Crude oil prices have strengthened in early trade.
MCX crude oil futures for March settlement moved between Rs 3,737 and Rs 3,728 before retracing to current level of Rs 3,733 per barrel.
MCX Gold for April settlement contract last quoted at Rs 16,754 per 10 grams after moving between Rs 16,784 and Rs 16,740 per 10 gram.
MCX Silver May settlement contract traded 0.4% higher at Rs 27,138 per kg, after having opened the session at Rs 27,802.
Base metal counters strengthened taking a heart from stronger close in London. MCX copper for April settlement was last quoting 0.7% higher at Rs 340.20 per kg, after opening the session at Rs 338.40.
MCX zinc March contract added 0.7% to trade at Rs 105.10 per kg.
