CO:Crude oil to trade higher, base metals in the red
India’s food inflation rose to 9.01 percent for the week ending 28th May, as prices of essential items like fruits, meat, milk and onions increased. Food inflation stood at 8.06 percent in the previous week. Fuel price index eased slightly to 12.46 percent in the same week from the previous 12.54 percent in the prior week.
The Bank of England (BOE) in its monetary policy meeting left interest rates unchanged at 0.5 percent as expected. Moreover, the asset purchase facility of the central bank was also left unchanged at 200 billion pounds as expected. The European Central Bank (ECB) also kept interest rates steady at 1.25 percent. The central bank may however look forward to tightening its monetary policy further in July.
Spot silver traded with a positive note today mainly on the back of dollar weakness coupled with mixed sentiments in the global financial markets. The white metal gained almost 0.5 percent and touched an intra-day high of $37.12/oz till 4.00 pm IST. On the MCX, silver rose more than 1 percent and hit an intra-day high of `55,629/kg today.
The base metals complex traded in the red on the LME today mainly due to expectations of rate hike in July from the ECB and choppy sentiments in the global equity markets. Additionally, demand concerns on account of global economic slowdown also exerted pressure on the metal.
Copper, the leader of the base metals declined 0.7 percent on the LME and around 0.6 percent in the MCX today as Codelco, the world’s largest copper producer, has increased the workforce in its EI Teniente copper mine in Chile. This has boosted production by 60 to70 percent and has eased supply concerns.
Dollar weakness coupled with OPEC’s failure to increase supply targets fueled crude oil prices to trade higher by 0.3 percent today. Additionally, sharp decline in US crude oil inventories created supply tightness and supported oil prices. It touched an intra-day high of $101.70/bbl and was trading around $100/bbl till 4.00 pm IST.
Outlook
We expect base metals to trade with a negative bias today mainly on the back of mixed global market sentiments coupled with global economic concerns. However, dollar weakness will cushion sharp downside in prices.
OPEC’s decision to keep the production quotas unchanged coupled with dollar weakness will help crude oil prices to trade higher today.
Gold and silver are expected to higher today, mainly taking cues from mixed sentiments in the global financial markets. Additionally, dollar weakness will also support prices further.
