Commodities recap- evening of 23rd Sept, 2008

Bullions behaved volatile due to fluctuations in currency as the dollar recovered some lost ground versus the euro and investors took profits after the previous session's gains after day’s high $910. Volatility in the equity markets also prompted investors to switch out of stocks in favour of safer assets. While investors are taking the opportunity to book profits, bullion is likely to turn higher if the dollar fails to recover. Traders will be watching U.S. and euro zone economic data due out later in the session, and the testimony of U.S. Treasury Secretary Paulson and Federal Reserve Chairman Bernanke before the Senate Banking Committee, for signs of where the dollar will move.

Crude oil slipped below $107 as Saudi Arabia had not cut crude volumes to Asian buyers, unlike to other regions, meaning supplies remain ample while end users cut demand. But end users in Asia said the kingdom, which pumped most of the extra barrels of OPEC output, had not cut back the volumes it sent to East Asia, still supplying them with full volumes. Trading was slow as Japanese dealers were away for a national holiday. But developments such as lower Saudi Arabian supply to oil companies, as reported by Reuters on Monday, unrest in Nigeria and higher-than-expected Chinese imports would support prices.

Copper plunged on profit-taking spurred by a firmer dollar and as investors worried about the impact of a $700 billion U.S. financial bailout plan. The strengthening of the dollar is the predominant factor. Nearly 8,000-tonne fall in LME copper inventories, primarily from the Gwangyang and Busan warehouses in Korea, suggested demand from China, the world's largest importer and consumer of copper was starting to pick up but there is still concern about the outlook for the U.S. economy that is why prices are not reacting positively to a second day of decline in LME stocks. Lead fell to $1,920 a ton and zinc declined to $1,770 a ton. Nickel dropped to $17,275 a ton, tin decreased to $17,500 a ton and Aluminum dipped to $2520.

Courtesy: Religare commodities