Commodities recap evening of 14th Aug, 09

Spot gold consolidated today however remained directionally upside. There are expectations of economic turnaround which is providing a rally to commodities. These expectations are helping to improve sentiment across assets, including stocks and oil prices. Gold is also getting support from a rise in oil prices due to concerns about oil led inflation.

The data on retail sales and jobless claims which released yesterday was also disappointing for the dollar. Demand for physical gold from exchange traded funds was soft with holdings with SPDR gold trust remaining the same. South African gold output fell 12.2% in volume terms and total mineral production dropped 7.3% in June compared with the same month in the previous year.

Crude oil remained positive as there is expectation that industrial production data of US will show rise raising the expectations that global economy will recover earlier than expected. It is believed that China's economy has bottomed out and US economy is close to bottoming out which is providing positive sentiments for the investors. This might lead to an increase in demand for oil from these countries thus taking the prices to higher levels in the near term.

Base metals traded in both directions today. Chile's Codelco, the biggest copper miner in the world, said it produced 783,100 tonnes of the metal in the first half of the year as compared to 675,000 tonnes during the same period last year. The Shanghai warehouse stocks of the red metal were also up by 20% this week as compared to last week. Stocks of Zinc also increased in Shanghai but these stocks could not provide much hindrance to the price rise.

Till July the imports of copper by China kept on increasing which gave a boost to the prices but these imports dropped in the month August. So, further price movement of the red metal now depends on the amount of imports in the coming months. Other base metals also remained upside and will take direction from copper only.

Courtesy: Religare Commodities

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