MUMBAI: A slew of strong economic data coming out of US fueled optimism in the financial markets. Such was the enthusiasm in the markets that copper prices surged near 19-month high while crude oil looked to penetrate $83 a barrel mark.
Gold also gathered momentum, completely ignoring strength in US dollar in initial trade. Gold clearly demonstrated investor confidence in metal as store of value and, hence, despite weak underlying trend the metal kept climbing higher in today’s session.
Analyst are expecting unwinding of position on the commodity counter towards the end of today’s session as we hit holiday shortened week-end.
Meanwhile, Nymex crude oil futures traded little change this morning as strong economic data spurred optimism about recovery in the world's largest energy consumer, overcoming pressure from a stronger US dollar. Traders are positioning before weekly inventory reports roll in later today.
Crude oil for May delivery was last trading little changed at $82.39 a barrel. Last night the contract rose 20 cents to settle at $82.37 per barrel in seesaw trade, rising earlier to $82.74.
Consumer confidence rebounded in March while a closely watched housing index showed home prices rose in January for the eighth straight month, data showed on Tuesday.
Traders were also awaiting weekly inventory data, from the Energy Information Administration (EIA) on Wednesday. Crude inventories probably climbed by 2.4 million barrels last week, posting their ninth consecutive weekly increase.
US gasoline stocks are projected to be down by 1.5 million barrels, with distillate stocks, which include heating oil and diesel, down by 1.6 million barrels.
Prices have traded in a range between $69 and $84 this quarter, touching $82.78 on Monday. Prices hit $83.95 a barrel in January, the highest since October 2008 at the peak of the financial crisis.
Oil stored at sea has dropped by 24 million barrels from its peak in November 2009, Goldman Sachs said in a report on Monday. OPEC members with production targets have reduced compliance to just 50% in March with prices above $80 a barrel.
Gold extended gain for as US dollar retreated against the Euro, raising yellow metals investment allure. However, gold remains prone to selling pressure on macro-economic worries. Spot gold was at $1,108.65 an ounce, up $6.40 an ounce from New York 's notional close on Tuesday.
Bullion has been in a $60 trading range in the past six weeks, indicating indecision among investors. US gold futures for June delivery added $3.80 to trade at $1,109.50 ounce after falling on Tuesday due to month-end position squaring and contract rollover.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,129.82 tonnes as of March 30, unchanged from the previous business day.
Copper came off 19-month high hit on Tuesday. Weakening US dollar and rising risk appetite boosted copper prices, with positive expectations for fund flows and metals demand going into the second quarter.
Benchmark copper for three-month delivery on the London Metal Exchange traded at $7,821 a tonne, before touching a high at $7,835 a tonne, as the euro hit a one-week high against the US dollar. There is some pullback in today’s session. The contract last traded at $7,770 a tonne, down $45.
A weak currency makes metals priced in dollars less expensive for holders of other currencies. Copper is on course for a 15% rise this quarter, and analysts see prices maintaining the upward trend from April, as economic activity improves.
Also aiding sentiment in recent sessions, copper stocks have fallen 40,175 tonnes since mid-February when they peaked at their highest level since October 2003. On Tuesday, they fell 625 tonnes to 514,900 tonnes.
Aluminum traded at a near ten week high at $2,300 in LME rings versus $2,283. LME stocks for the metal, used in transport and packaging, rose 30,075 tonnes to remain near all-time highs above 4.6 million tonnes.
Domestic commodity counters traded mixed tracking global markets. Rupee weakening against the US dollar supported commodity counters to maintain steady upward trend.
MCX crude oil futures for April settlement moved between Rs 3,725 and Rs 3,711 before retracing to current level of Rs 3,719 per barrel.
MCX Gold for April settlement contract last quoted at Rs 16,335 per 10 grams after moving between Rs 16,341 and Rs 16,292 per 10 gram. MCX Silver May settlement contract added 0.3% to trade at Rs 26,921 per kg, after having opened the session at Rs 26,846.
Base metal counters turned softer on profit taking. MCX copper for April settlement was last quoting at Rs 351.95 per kg, after opening the session at Rs 353.10.
MCX zinc March contract traded marginally lower at Rs 104.75 per kg.
