Spot Gold prices gained marginally today and the yellow metal prices were hovering around $1186/oz till 3.45 pm IST. The weakness in the US dollar index (DX) helped the gold prices to gain. Gold prices have the tendency of trading inversely to the greenback. The DX- a gauge against a basket of currencies was trading at 80.51 till 3.45 pm IST. The DX is on a constant decline as rise in risk appetite in the global financial markets is leading to reduced demand for the currency as a safe-haven.
Copper prices declined marginally today after touching a four-month high of $7495/tonne on the LME yesterday. Inevitable profit booking at the higher levels exerted pressure on the red metal prices today. However, sharp downside in copper prices was cushioned on the back of decline in the DX.
Another factor that exerted pressure on the copper prices was the increasing inventories on the LME warehouse. Copper inventories increased by 1000 tonnes to reach 414,075 tonnes today. The trend of declining inventories seems to be ending as copper inventories have increased in three out of the last five sessions.
Crude oil prices touched a fresh four-month high of $82/bbl till 3.45 IST today taking cues from the movement in the DX. The weakness in the DX made crude oil prices look attractive for holders of other currencies. The American Petroleum Institute (API) is expected to release data on crude oil inventories later in the evening today. In the last week, crude oil inventories had increased much more than market expectations.
Outlook
On the macro-economic front, the US authorities are expected to announce economic data on core PCE price index, personal spending, factory orders and total vehicle sales today. The European markets were trading in the red, but were off their intra-day lows in the afternoon trade. Financial markets are expected to trade on a positive note in the evening session.
The DX is expected to remain weak today as risk appetite in the financial markets will decrease demand for the currency. Copper prices are expected to gain today taking cues from the movement in the DX. Crude oil prices will take cues from the inventory data to be released by the API today. However, crude oil prices will be supported on the downside on the back of weakness in the DX.
Gold prices will also receive support on the downside from the weaker DX. However, sharp gains in the yellow metal prices would be capped as investors would flock towards higher-yielding and riskier investments.
