Spot Gold prices declined today and were hovering around $1235/oz till 3.45 pm IST today. The US dollar index (DX) – a gauge against a basket of currencies continued to appreciate today, which exerted pressure on gold prices. However, the yellow metal prices were trading in the green on the MCX platform due to sharp depreciation in the Indian rupee.
Risk aversion has emerged in the global financial markets today after Conference Board of China announced that it’s leading economic index increased by 0.3% in April as against previously reported figures of 1.7%. The index marked its lowest rise since November, 2009.
Copper prices came under pressure and lost more than 2% on the LME till 3.45pm IST today. Slower economic activity in China weighed on the red metal prices. Moreover, the DX which strengthened on the back of risk aversion in the financial markets also kept the copper prices under check. Inventories of copper continued to decline at the LME warehouse today, but this did a little to help the prices from tumbling down. The red metal inventories declined by 1,225 tonnes to reach 451,950 tonnes today.
Crude oil prices also came under pressure, loosing around 2% on the Nymex till 3.45 pm IST today. The stronger DX made the commodity prices less attractive for holders of other currencies. However, the National Hurricane Center (NHC) said that storm “Alex “is strengthening and is likely to become a hurricane in the coming hours. A hurricane warning was issued by the NHC today and it is likely to disrupt the production activities in the region.
Outlook
On the macro-economic front, the US authorities are expected to announce economic data on consumer confidence and house price index today. Unfavorable economic data from the world’s largest economy would further add to the woes. We expect the DX to remain strong in the evening session on the back of risk aversion in the financial markets.
Copper prices will continue to trade with a negative bias taking cues from the movement in the DX. Moreover, slow economic activity in China will also be a negative factor for the red metal prices. Crude oil prices will also trade with a negative bias today, but any major news on the hurricane front will support the prices. Gold prices will also trade with a negative bias as the stronger DX will keep the yellow metal prices under check.
