European markets traded lower today as investor remained cautious ahead of European Union (EU) Summit. Escalating tensions over uncertainty about the ability of Euro Zone leaders to tackle with the debt crisis led to rise in risk aversion in the global markets today.
Spot gold prices declined sharply by more than 1 percent today on account of a stronger dollar. Additionally, fall in crude oil prices also affected the inflation-led demand for gold. The yellow metal touched an intra-day low of $1715/oz and was hovering around $1719/oz till 4.30 pm IST.
MCX Gold February contract slipped slightly around 0.2 percent as further decline was cushioned on account of a weaker Rupee and touched an intra-day low of Rs27,845/10 gm till 4.30 pm IST today.
Taking cues from fall in gold prices and downside in base metals, spot silver also traded lower by more than 2 percent today. In addition to this, dollar strength also acted as a negative factor for the white metal prices. On the MCX, Silver March contract dropped by 1.1 percent and touched an intra-day low of Rs56,425/kg till 4.30 pm IST.
Deepening concerns with respect to Euro Zone debt worries along with weak sentiments in the global markets exerted downside pressure on the base metals complex today. Additionally, strength in the US dollar also pulled metal prices in the downward direction.
However, depreciation in the Indian Rupee cushioned sharp fall on the domestic bourses.
Copper is the worst performer of the day, as the metal declined sharply by 2 percent on the LME and around 1.2 percent on the MCX till 4.30 pm IST today.
Nymex crude oil prices declined by 0.5 percent today, on the back of re-emergence of European debt crisis which created demand concerns for crude oil. Additionally, a stronger dollar also acted as a negative factor for the commodity.
Oil prices were trading around $99.07/bbl after touching an intra-day low of $98.72/bbl till 4:30pm IST. On the MCX, crude oil prices rose around 0.2 percent due to Rupee depreciation and were hovering around Rs4951/bbl till 4:30pm IST today.
Outlook
Gold and silver prices are expected to come under pressure today, mainly taking cues from a stronger dollar. Silver will also take cues from fall in gold prices coupled with downside in base metals.
Rising worries over Europe’s debt crisis will lead to poor sentiments in the global markets. On account of this coupled with dollar strength, we expect base metals to trade with a negative bias today.
We expect crude oil to trade lower today, on the back of a stronger dollar along with rise in risk aversion in the markets. However, supply concerns from Iran may cushion sharp decline in oil prices.
Courtesy: Angel Commodities
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