Spot Gold prices recovered in the Asian trade today after falling below $1200/oz on Monday. The yellow metal prices were hovering around $1205/oz till 3.40 pm IST today. Gold prices gained today mainly on the back of the weakness in the US dollar index (DX). The DX which touched an intra-day high of 84.56 weakened in the afternoon trade today on the back of positive sentiments in the European equity markets. The European indices gained more than 1% today, which led to lower demand for the DX as a safe-haven investment.
Copper prices were off its intra-day lows and were trading around $6622/tonne on the LME till 3.40 pm IST. The red metal prices touched an intra-day low of $6555/tonne, but later pared losses on the back of weakness in the DX. The trend of declining inventories continued at the LME warehouse. Copper inventories declined by 2,700 tonnes to reach 432,550 tonnes today.
Crude oil prices also rebounded after touching an intra-day low of $74.25/bbl and were hovering around $75.40/bbl on the Nymex till 3.45 pm IST today. The weakness in the DX made the dollar-denominated commodity more attractive for holders of other currencies. The American Petroleum Institute (API) is expected to release data on crude oil inventories later in the evening today.
Outlook
On the macro-economic front, the US authorities are expected to announce economic data on trade balance and federal budget balance today. Data is expected to come on the negative side, which may lead to higher demand for the DX as a safe-haven investment. The DX is expected to rebound in the evening session and will exert pressure on the dollar-denominated commodities.
Copper prices would come under pressure in the evening session on the back of strength in the DX. Crude oil prices will take cues from the inventory data to be released by the API and the movement in the DX. The stronger DX will exert pressure on the crude oil prices. However, favorable inventory data would cushion the sharp downside in the crude oil prices. Gold prices would also give up gains towards the end of the session as the yellow metal has the tendency to trade inversely to the DX.
