Spot Gold prices gained around 1% till 3.45 pm IST today mainly on the back of the weak US dollar index (DX). The DX-a gauge against a basket of currencies was little changed to its earlier close of 80.61 till 3.45 pm IST.
The softer DX made gold prices look attractive for holders of other currencies. Financial markets witnessed a choppy session today as expected. The Asian markets were mixed and the European equities were trading in the red in the afternoon trade today, after posting strong gains in the previous two sessions of this week.
Copper prices declined, albeit marginally for a second consecutive day on the LME and the red metal prices were trading around $7390/tonne till 3.45 pm IST today. Inevitable profit booking at the higher levels continued to exert pressure on the copper prices. Moreover, metal prices also took cues from the choppy equities worldwide.
Copper inventories declined marginally by 125 tonnes today, but this positive sentiment was faded away by a simultaneous decline in cancelled warrants- the metal booked for removal from the LME warehouse. Cancelled warrants declined by 1200 tonnes today.
Crude oil prices declined today and the commodity prices were hovering around $81.87/bbl till 3.45 pm IST. Crude oil prices are awaiting the weekly inventory data scheduled to be released by the US Energy department today. Markets are expecting the inventories to decline by 0.9 million barrels. The American Petroleum Institute announced yesterday that crude oil inventories declined by 776,000 barrels in the week ending July 30th.
Outlook
On the macro-economic front, the US authorities are expected to announce economic data on job cuts, Non-farm employment change and ISM Non- Manufacturing PMI today. Economic updates are constantly coming on the negative side, raising concerns over a fragile economy state in the world’s largest economy. Poor economic data from the US is indicating that the Federal Reserve may avoid raising interest rates for a further period to support the economic recovery.
This is leading to weakness in the DX, which is a low-yielding currency. Financial markets are expected to continue trading on a choppy note today. Copper prices will take cues from the sentiments in the equity markets. However, sharp downside in the red metal prices will be cushioned by the weaker DX. Crude oil prices will take cues from the inventory data and the movement in the DX. Gold prices will also gain today as the yellow metal has the tendency of trading inversely to the greenback.
