Spot Gold prices remained little unchanged to its previous close, hovering around $1256/oz till 3.45 pm IST today. The yellow metal prices had touched a record high of $1262/oz in the last week. The Asian as well as the European financial markets started the week on a positive note today. China’s indication to end its peg against the dollar has led to risk appetite in the financial markets. Hence, positive sentiments in the financial markets led to lower demand for gold today. The US dollar index (DX) also continued to remain weak today and was trading around 85.57 till 3.45 pm IST.
Copper prices rallied today as the weakness in the DX on the back of positive news from China led to sharp gains in the red metal prices. Copper prices gained around 3% on the LME till 3.45 pm IST today, after declining in the last week. China’s decision to devalue its currency would boost copper prices, as the Asian tiger is not only a major producer, but also imports copper in huge numbers, thanks to its strong domestic demand.
Crude oil prices also gained today taking cues from the weaker DX. Nymex crude oil prices had gained more than 1% till 3.45 pm IST today. China’s indication of revaluating its currency boosted the crude oil prices. China is the second largest consumer of crude oil after the US. Another factor that is supporting the commodity prices is the approaching hurricane season. This year the hurricane is expected to be above average, which may lead to supply constraints from the Gulf of Mexico region.
Outlook
There is no major economic data to be announced from the US today. We expect the DX to remain weak today as risk appetite in the financial markets will lead to lower demand for the DX. This factor will help the dollar-denominated commodities to gain. However, gold prices will come under pressure today as positive sentiments in the financial markets may lead to lower demand for gold as a safe-haven today. Copper and crude oil prices will gain today as weakness in the DX will help the commodity prices to march northwards.
