Spot Gold prices gained touching a high of $1211/oz till 3.45 pm IST today on the Comex division of the New York Mercantile Exchange. The Eurozone concerns re-surfaced back as investors fear that despite the bailout package provided to the ailing economies, the countries in the Eurozone would face major hurdles in economic growth.
The countries would find it difficult to curtail their fiscal deficits as per the norms set up by the European Union. Hence investors are flocking towards safer investments like gold, as the yellow metal is also considered as the asset of last resort.
Copper prices came under pressure on the LME today after gaining in yesterday’s trading session. The red metal prices slipped below $7000/tonne on the LME till 3.45 pm IST today as the dollar rebounded on the back of financial uncertainty in the markets.
Another factor which added pressure on the metal prices was the Chinese inflation, which rose to 2.8% as against an earlier figure of 2.7%. The surge in inflation and rising property prices in the world’s fastest growing economy is leading to concern that the government may tighten liquidity.
Crude Oil prices declined more than 1% on the Nymex till 4.00 pm IST today mainly on the back of strength in the greenback. A stronger dollar makes the commodity prices less attractive for holders of other currencies. Another negative factor for crude oil prices is the Chinese concern of monetary tightening and rising inventories in the US, the world’s largest consumer.
Outlook
On the macroeconomic front, the US authorities are expected to announce economic data on wholesale inventories and economic optimism today. However, the dollar is expected to remain strengthened today on financial uncertainty.
Concern that the Chinese authorities will again look forward to raising interest rates will also weigh on the commodity prices including copper and crude oil. Gold prices are expected to trade with a positive bias despite dollar strength as the yellow metal is attracting demand in terms of a safe-haven asset.
