BULLION
Improving risk appetite among investors and recovering equity markets have resulted in diversion of funds from the yellow metal. Gold prices slid on the first trading day of the week. The strength in the European currency against its American counterpart also begot selling in gold.

The Euro gained on Monday after the data showed that industrial production of Euro zone climbed higher than expected. The better than expected economic data also helped in easing the concerns of sovereign debt crisis. The European Union Statistics showed that the industrial production of the region rose 0.8 percent in April from March as opposed to the expectation of a 0.5 percent growth. The European Central bank has purchased government bonds worth 6.5 billion Euros in the fifth week of its bond repurchase program.

U.S. gold futures for August delivery on the COMEX division of the NYMEX settled down $5.70 at $1,224.50 an ounce. However, Moody’s Investors Service downgraded Greece government bond to junk status and pointed towards the risks in the IMF and Euro zone rescue package for the debt laden country. Holdings in The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, were unchanged at a record high of 1306.137 tonnes.

ENERGY
Crude oil prices were also trading with gains as rising equity markets and a recovery in the Euro enticed buying in the counter. Better industrial production of Europe and the expectation of improved factory growth in US, the largest consumer of crude oil, also helped prices up.

Nevertheless, the downgrading of Greece government bond to junk status by Moody’s Investors Service helped the US dollar gain some of its lost grounds from earlier during the day. Crude oil prices also gave back some its gains later during Monday.

Natural gas prices were trading with gains on Monday in spite of the US government report showing an increase in stocks as hotter weather forecasts increased the prospective demand for the commodity.

Natural gas for July delivery on the New York Mercantile Exchange recently traded 12.9 cents, or 2.7%, higher at $4.91 a million British thermal units. Meteorologists with the private forecasting firm Commodity Weather Group see warmer-than-normal temperatures across most of the country from June 24 to June 28, including the Midwest, the Southeast and the Mid-Atlantic.

Forecast for the hurricane season to be more intense than normal is also expected to lift natural gas prices.

BASE METALS
Base metals prices gained on Monday with rising stock markets and strong economic data from the Euro zone lend strength to the metals. Confidence in the market was elevated as seen by the gains accumulated by the stock markets across the globe.

The strong sense of economic recovery complemented by the positive economic data release continues to support the sentiments of base metals. Copper futures for July delivery rose 8.8 cents, or 3 percent, to $2.992 a pound on the Comex in New York, the fifth straight gain, the longest rally since early January.

The Chinese will be out of the markets through to Wednesday as the country celebrated the Dragon Boat Festival. Stocks of the red metal also supported the trend. last week Shanghai stocks CU-STX-SGH fell 9 percent to 139,332 tonnes, while LME stocks fell about 1.2 percent to 465,000.

Courtesy: JRG Commodities Research

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