COM: Gold, crude oil decline, copper under pressure
Spot Gold declined, albeit marginally till 4.00 pm IST today as the dollar strengthened for a third consecutive session this week. But, the yellow metal had gained yesterday despite the stronger dollar on the back of an alternative safe-haven investment.
The euro continued to fall against the dollar today on mounting concerns that a financial-rescue plan for Greece may falter. Greece has been asking the EU for more favorable interest rates and to amend certain parts of the bailout proposal from the International Monetary Fund. Risk aversion has set its tone in the financial markets which is also leading the greenback to strengthen.
Copper prices came under pressure today retreating from an earlier high of $8000/tone mainly on the back of the strength in the dollar. A stronger dollar usually exerts pressure on the dollar-denominated commodities making it less attractive for the holders of other currencies.
Moreover, inventories of copper increased at the LME warehouse today by 600 tonnes, whereas cancelled warrants – the metals booked for removal from the LME warehouse also decreased by 725 tonnes. These factors also weighed on the prices. The red metal prices lost more than 1% on the LME today till 4.00 pm IST.
Crude oil prices continued to decline for a second consecutive day on the Nymex today till 4.00 pm IST as the stronger dollar kept the commodity prices under check. Moreover, the US Energy department report yesterday revealed that crude oil inventories increased around 2 million barrels as against forecasts of an increase of 1 million barrels.
Outlook
On the macroeconomic front, the US authorities are expected to announce economic data on unemployment claims. Though the economic data from the US is coming on the positive side since a couple of days, the major concern which is affecting the market sentiment is the Greece’s concern. The dollar would continue to strengthen today which would exert pressure on the dollar-denominated commodities.
However, gold prices would trade with a positive bias avoiding the usual relationship of trading inversely to the dollar, as financial uncertainty in the markets would lead to demand for the yellow metal as a safe-haven investment. Crude oil prices would gain back despite rising inventories in the US as positive manufacturing data from the major economies could increase demand in the near future.
