Spot Gold prices rebounded strongly today after declining marginally in yesterday’s session. The yellow metal prices touched a high of $1246/oz till 3.45 pm IST on the Comex division of the New York Mercantile exchange. Investors feel that the growth in the Eurozone would be affected to a huge extent by the ongoing crisis. Despite the financial assistance, the ailing economies would find it difficult to overcome their ongoing economic issues and curtail their huge fiscal deficits. This is leading to huge demand for gold as a safe-haven investment.
Copper prices came under pressure, losing more than 2% on the LME till 3.45 pm IST today as the dollar strengthened on Eurozone concerns. Risk aversion in the financial markets also led the dollar to strengthen which in turn affected the dollar-denominated commodities. The trend of declining inventories of copper continued at the LME warehouse, but this positive factor did a little to help the prices from tumbling down.
Crude oil prices were also trading in the red on the Nymex till 3.45 pm IST today as the stronger dollar made the commodity prices less attractive for holders of other currencies. Moreover, concern of rising inventories in the US also weighed on the crude oil prices. The US energy department had reported on Wednesday that crude inventories rose by 1.95 million barrels last week to 362.5 million, the highest in almost a year.
Outlook
On the macroeconomic front, the US authorities are expected to announce a host of economic data comprising of retail sales, industrial production, consumer sentiment and business inventories. However, the metal prices will continue to take cues from the movement in the dollar. The dollar is expected to remain strengthened today which will make the commodity prices less attractive for holders of other currencies.
Gold prices are expected to trade with a positive bias as the yellow metal is attracting demand in terms of a safe-haven asset. Crude oil prices will trade with a negative bias on concern of rising inventories in the US and the stronger dollar. Copper prices will also trade with a negative bias on the back of a stronger greenback.
