CO:Base metals under pressure, silver weakens on dollar gains
German industrial production declined unexpectedly by 0.6 percent in April as against the rise of 1.2 percent in the previous month and forecast of 0.1 percent. Euro zone revised GDP grew as expected by
0.8 percent in the first quarter (Q1) on 2011.
German trade surplus declined to 12 billion Euros in April from the prior 15.1 billion Euros in the previous month. The country’s exports rose 13.4 percent in April of the current year while the imports by 20.1 percent as compared to the same period a year ago. French trade deficit gap widened to 7.1 billion Euros in April as against 5.9 billion euro in March.
Strength in the US dollar exerted pressure on silver prices which declined almost 2.5 percent in today’s trading session. Silver touched an intra-day low of $36.14/oz and was trading at $36.18/oz till 4.00 pm IST. On the MCX, the white metal slipped around 2 percent and touched an intra-day low of `54,363/kg.
All the base metals came under pressure on the LME today mainly on the back of a stronger dollar coupled with mixed sentiments in the global equity markets. Copper prices dropped almost 2 percent on the LME to trade below the level of $9,000/tonne and touched an intraday low of $8,990/tonne till 4.00 pm IST. On the MCX, the red metal declined1.6 percent and was hovering around `404/kg.
OPEC’s expected decision to increase oil supply targets is not certain as voting indicates only 50 percent support to raise production quotas. Nymex crude oil traded lower by 1 percent today on account of a stronger dollar. Oil touched an intra-day low of $98.10/bbl and was hovering around $98.198/bbl till 4.00pm IST.
The US Energy Department (EIA) is expected to release its weekly inventory data later in the evening today. According to the Reuters poll, crude oil inventories are expected to decrease by 0.3 million barrels for the week ended 6th June.
Outlook
Base metals are expected to come under pressure today mainly due to a stronger dollar along with choppy sentiments in the global financial markets.
As OPEC’s decision is yet to be released, we expect crude oil prices to trade on a volatile note today. If the oil cartel raises production quotas then prices could witness further downside. Dollar strength will exert pressure on the commodity.
We expect the Bullion pack to trade on a sideways note today, taking cues from dollar strength and mixed sentiments in the global markets.
