Spot Gold prices remained little unchanged to its previous close, trading around $1244/oz till 3.45 pm IST today. The yellow metal prices had rallied yesterday touching a high of $1251/oz. The European markets pared major intra-day gains today in the afternoon trade after opening on a positive note. The US dollar index (DX) traded slightly higher against its previous close on the back of risk aversion in the financial markets.

Copper prices continued to decline and lost more than 1.5% on the LME till 3.45 pm IST today. Poor economic data from the US yesterday is weighing on the metal prices. Moreover, the World Bank said today that China’s growth rate will ease in the coming years. The world’s fastest growing economy will grow at 9.5% this year and 8.5% in 2011, the World Bank said. Slow growth rate in China would have a negative impact on the base metal prices as China is the largest consumer and major driver of the base metals demand.

Crude oil prices were trading in the red today, mainly on the back of poor economic data from the US coupled with concerns over rising inventories in the US, the world’s largest consumer. Slow manufacturing growth in the US is hurting the crude oil prices. Moreover, the World Bank’s forecast of slow growth in China would also impact the crude oil prices as China is the second largest consumer of crude oil after the US.

Outlook

There is no major economic data to be released from the US today. The DX is expected to rebound in the evening session as risk aversion may lead to investors turning towards safer investments ahead of the weekend. The stronger DX will exert pressure on the dollar-denominated commodities like Copper and Crude oil.

Concerns of slow economic growth in China will also weigh on the base metals as well as the crude oil prices. However, Gold prices will continue to trade with a positive bias as uncertainty in the financial markets over economic growth will lead to demand for gold as a traditional safe-haven asset. Strength in DX may not be able to deter demand for gold.

Courtesy: Angel Commodities

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