Spot Gold prices continued to remain under pressure till 4.15 pm IST today as the strength in the dollar made the yellow metal look unattractive as an alternative investment for holders of other currencies. Risk aversion in the financial markets has led the dollar to strengthen since the last weekend.
Unexpected increase in repo rates by RBI in India has led to concerns that the growth may stall on withdrawal of stimulus. Moreover, macroeconomic concerns including Greece’s sovereign debt issues are also hampering the investor sentiments and helping the greenback to gain.
Copper prices started the week with a negative bias with prices declining on the LME today on the back of stronger dollar coupled with risk aversion in the financial markets. Declining inventories of the red metal did a little to help the prices as the positive sentiment was faded away by a simultaneous decline in cancelled warrants – the metal booked for removal from the LME warehouse. LME inventories of copper declined by 900 tonnes to reach 522,075 tonnes today.
Crude oil prices suffered in today’s trading session till 4.15 pm IST with Nymex crude oil prices falling below the crucial 80/bbl mark. The stronger dollar is keeping the crude oil prices under pressure. Unexpected increase in interest rates by RBI has led to a concern that growth may stall leading to weaker demand and eventually hurting the prices. China is also expected to raise interest rates to control the rising inflation. This move by the second largest consumer of crude oil can have a negative impact on prices.
Outlook
There is no economic data to be released from the US today. Hence the dollar would continue to remain strengthened till the markets receive a fresh trigger for the dollar-denominated commodities to gain. Commodity prices will take cues from risk sentiments in the financial markets which are reflecting signs of risk aversion. Metal prices including copper may continue to trade with a negative bias today.
Crude oil prices will continue to remain under pressure from the stronger dollar and concerns of rising inventories in US. Gold prices are also expected to be under pressure as the yellow metal prices usually trade inversely to the dollar.
Courtesy: Angel Commodities
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