Gold retreats on dollar, copper, crude oil subdued

Spot Gold prices slumped 1% till 5.00 p.m. IST as a stronger dollar made the yellow metal look expensive for holders of other currencies. Gold fell for the first time in five days mainly on the back of a rise in the dollar as the currency gained as much as 0.8% against the euro today.

Gold, which typically moves inversely to the greenback, reached an all-time high of $1,152.85/oz yesterday. The metal has climbed 29 percent this year as the U.S. currency has dropped 5.9 percent against the euro.

The World Gold Council said that Gold demand climbed 10 percent in the third quarter from the previous three months after investors bought the metal as a currency hedge and jewelry purchases picked up. A rise in investment demand from central bankers has also added to the upside in Bullion prices. Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, rose 3.66 metric tons to 1,117.49 tons yesterday, the first gain since Nov. 9.

Copper prices which hit a 14-month high on of $6,992 on the LME on Wednesday traded on a subdued note today. Prices drifted in the red after latest warehouse inventory report which showed that stocks rose for the 13th day in a row, climbing 6,450 tonnes to a fresh six-and-a-half month high of 420,550 tonnes. But the overall trend in copper remains up and intact as the threat of strike action continues to be a major feature currently.

Crude Oil fell for the first time in four days as the dollar gained against the euro and made the commodity look less attractive for holders of other currencies. Oil fell from a one week high reached yesterday after the US Energy Department reported a decline in crude oil stockpiles. Crude oil stockpiles declined 887,000 barrels to 336.8 million last week.

Outlook

Today the US is expected to announce economic data on unemployment claims, Philadelphia manufacturing index and CB leading index today. Positive data could lead to weakness in the dollar index in the later part of the trade. But negative data could lead to risk aversion in the financial markets which could boost demand for the dollar as a safe-haven. Gold, Copper and Crude oil prices could trade with a negative bias and strength in the dollar could add pressure on the downside.

Courtesy: Angel Commodities

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