CO: Overall Metals trends correlated with global stocks
BULLION
Silver prices advanced on Monday followed by broad gain in commodities complex, while Gold traded sideways to close almost at the Friday’s level. Spot gold hovered around $1190.45 to $1174.05 to finally close at $1181.10.
Silver advanced to $18.58 posting a low of $17.92 during the Asian trading session. On MCX, the October expiry Gold prices remained lower, failing to catch up the recovery of the global market. The contract closed the day off 75 rupee at 17862.
However, Silver for September expiry on MCX rose as much as 354 rupees or 1.22%. The Indian parity prices have been under influence from the Indian rupee moves which gained over 22 paisa on Monday and expected to gain further on Tuesday.
Hedge funds and other large speculators increased their net-long position by 5.9 percent in COMEX gold futures in the week ended July 27, according to U.S. Commodity Futures Trading Commission data. That marked the first increase in a month. However, Exchange-traded fund investors kept dumping the metal. Holdings at SPDR Gold Trust, the largest ETF backed by gold, fell to 1,282 metric tons last week, from a peak of 1,320 metric tons in late June.
Gold prices are trading in an intermediate bearish trend with downside support at $1174 level break of which the market is expected to decline. Resistance for the day is seen at $1190-$1192 range.
ENERGY
Crude oil futures have burst above the $US80 a barrel level for the first time in four months driven by strong investor confidence in a global economic recovery. In New York, light, sweet crude for September delivery settled up 3%, or $US2.39, at $81.34 a barrel and trading in Singapore today has stayed above that level. Brent crude on the London ICE futures exchange gained $US2.64, or 3.4%, at $80.82 a barrel and has also risen in subsequent electronic trading.
The surge in oil prices and other commodities follows a strong showing on world equities markets after July manufacturing indexes in the US, the euro zone and the UK all came in better than expected. The DJIA gained over 2% yesterday.
Climatic and political threats are muted rather than absent. A tropical depression has formed in the middle of the Atlantic Ocean, but so far is less than the threshold to be declared a tropical storm. August and September are the most active months of the Atlantic hurricane season and storms can threate states along the US Gulf of Mexico, which account for 31% of US oil output and 43% of the country’s refining capacity.
BASEMETALS
Base Metals surged on Monday supported by strong equity market sentiment. Copper forward three month delivery on the LME rose to $7510 to close at the day’s high gaining 2.93% since Friday’s closing. Lead and Zinc were the major gainers posting 6.57% and 4.79% advance respectively. Nickel rose 3.78%.
Lead was supported by expected rise in US auto sales. U.S. auto sales probably rose to the highest level of 2010 last month as model-year closeout deals drew consumers back to showrooms. Automakers are offering discounts that are 3.8 percent higher than a year earlier to clear out 2010 vehicles and make room for new models, according to industry researcher. The gains would indicate that sales, while still below historical levels, are steadily improving.
The overall base Metals sentiment was linearly correlated with the global stocks yesterday and rose on improved sentiment from banks. Bank stocks advanced after HSBC’s earnings, which were reported yesterday after trading in Hong Kong’s stock market ended. Pretax profit of $11.1 billion beat the $8.8 billion median estimate.
BNP Paribas SA, the largest lender in France, also reported higher- than-estimate profit yesterday. Shares of industrial and commodity companies posted the biggest advance among the 10 industry groups on the MSCI Asia- Pacific Index. After a sharp rally in base metals mild correction can be expecte in today’s trading.
