BULLION
Lingering debt concerns in the Euro zone has helped gold prices up on the first trading day of the week as safe haven buying continued to pile up next to the metal in spite of strength in the US dollar. Increasing skepticism in the market that the agreed bailout amount would not be enough to get the debt laden Greece ashore has helped the US dollar gain against its major counterparts on Monday. However, the yellow metal also rose alongside the US dollar and managed to touch five month high.
Gold for June delivery gained $2.60, or 0.2%, to settle at $1,183.30, the highest since December 3rd. The European currency was also pressure following the release of positive US economic data. Data showed that American manufacturing and construction activities have climbed last month, asserting the process of recovery is already underway. Even though the rising US dollar did put pressure on precious metal, safe haven demand helped prices up. Holdings of SPDR, the largest gold backed exchange traded fund, remained unchanged at 1159 tonnes.
ENERGY
Crude oil prices continued to tick up in the presence of a strong US dollar as US data gave rise to the idea of improving demand for the commodity. Data released by the US Institute of Supply Management showed that factory index jumped towards 60.4, the highest since 2004, as against the expectation of 60. Whereas, personal spending in US rose 0.6 percent during the month of March as reported by the Commerce department. Crude oil for June delivery rose 4 cents to $86.19 on the New York Mercantile Exchange, the highest settlement since April 6.
Natural gas prices also benefitted from the positive economic data releases and rose on the first trading day of the week. There were also concerns about the effects of the oil spill in the Gulf of Mexico on natural gas production. Natural gas for June delivery on the New York Mercantile Exchange settled 8 cents, or 2.04%, higher at $4.00 a million British thermal units.
However, high inventories of natural gas continue to put pressure on the commodities. Natural gas in U.S. storage for the week ended April 23 stood at 1.912 trillion cubic feet, 5.6% higher than last year and 18.8% above the five-year average.
BASE METALS
Base metals accumulated losses on Monday amidst rising US dollar and fears of Chinese
monetary tightening could affect the demand for base metals. Copper prices slid towards seven month lows yesterday after China decided to hike its cash reserve requirement by 50 basis points on Sunday. It is the third time the country has done it this year, giving rise to fear that it might curb production activity in the country, in effect reducing the demand for base metals.
The rise in US dollar following the debt troubles in the Euro zone also put pressure on base metals prices on Monday. Data showed that Stockpiles of copper tracked by the Shanghai Futures Exchange increased 0.8 percent to 189,441 metric tons last week, the highest level since at least 2003.
