Bullion
Gold and silver prices remained buoyed on the first trading day of the week despite the main markets of US and UK being closed on holidays as European debt crisis continued to lend support to precious metals. The rating cut of Spain to AA+ from the previous AAA status by the Fitch credit rating agency has affirmed the fears of debt contagion in the Euro zone and in turn driving investors towards the yellow metal because of its safe haven appeal.
The political unrests in Korea had also lend support to the metal. The attack by Israel on a civilian flotilla off gaza also increased the demand for the yellow metal on Monday. Meanwhile, the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings were unchanged at a record of 1,267.930 tonnes as of May 28. The market looks forward to the manufacturing and construction spending data scheduled for released later during the day.
Energy
Crude oil prices gained initially on the first trading day of the week and approached the highest in a week following expectations of demand for the commodity to emerge following strong economic signals from US, the largest consumer of oil. However, the fears of European debt crisis linger and nip off any effort of prices to gain.
The demand for crude oil is expected to rise during the month of June as summer driving season begins in the US. About 28 million people were expected to be on road trips in the U.S. during the three-day Memorial Day weekend that ends today, a jump of 5.8 percent from a year earlier and the first increase since 2005, according to AAA, the country’s biggest motoring organization.
Natural gas prices have gained on Monday following expectations of hurricane. The data showing a decrease in rig counts and positive economic data from US have also lifted the sentiments in the market. Industrial demand for natural gas is also expected support prices of natural gas. China will raise wholesale natural gas prices by 24.9 percent today, the National Development and Reform Commission said in a statement yesterday.
Base metals
Base metals prices were trading with losses on Monday as continued strength in the US dollar weighed on the market. The fears of European Debt contagion gripped the market and sent Euro lower against the US dollar and in turn weakening prices of base metals.
However, strong economic data releases last week and expectations of a improvement in the US economy coupled with falling stocks of copper is expected to support the sentiments in the market. Shanghai copper stocks fell some six per cent on the week to 157,698 tonnes, while LME stocks fell 0.6 per cent last week to around 477,000 tonnes.
The market looks forward to the manufacturing and construction spending data scheduled for released later during the day.
