Commodity Online
In the past few weeks, several positive developments are taking place in commodity Futures in India. After the lifting of ban on rubber, potato, chickpeas and soyoil the Forward Markets Commission has indicated that it plans to resume futures trading in wheat, rice, Tur and Urad by January 2009. However, it will take time to achieve volumes in the revived futures.

Inflation has come down to 8 percent which augurs well for the ruling coalition which is has to face the elections in a couple of months.

Increased planting of most rabi crops this year will also be enabling a further easing of inflationary pressures in the economy. According to the Agriculture Ministry’s latest Crop Weather Watch Report, released here on Friday, Wheat has been planted so far on 213.60 lakh hectares (lh), against 204.70 lh covered during the same period last year.

Precious Metals
Gold prices bounced back in the last week, as rise in oil prices and sharp fall in dollar against major currencies supported yellow metal. Prices touched a high of $834.50 per ounce on Thursday before falling on account of profit booking by traders at higher levels. Weak macro economic data from US has boosted gold’s appeal as a safe asset in the times of uncertainty. Gold has been moving completely in tandem with currency markets at present, tracking its movements very closely. Spot gold continues to meet with a stiff wall of resistance between $830-$840 zone.

With the global economic situation not expected to improve in the near future, all asset classes will continue to remain under pressure except for gold, as it is always considered a safe-haven investment during extraordinary times, such as we are witnessing presently. During this week, traders will have to watch out for US Fed decision on interest rate. As per market expectation fed is likely to cut interest rate and any larger than expected cut would support Gold prices. Spot gold prices have crucial support at $770/oz and $740/oz, whereas resistance is seen at $840/oz. and $870/oz.

Base metals
Base metals prices are taking cues from the currency and equity markets but the overall fundamental picture remains bearish. A weaker dollar since the beginning of the week has helped base metals revive. But fundamentally the picture is bearish and the trend remains down. Overall trend in base metals remains down and rallies in the short-term should not be taken as a change in trend.

The coming week is expected to be volatile as markets may enter a profit-booking phase after a bout of buying which was seen in this week. Though metals received some support during the week, poor macroeconomic prospects continue to dominate the market. Copper prices are highly volatile and could trade below their marginal cost of production in the coming week as economic prospects are weak. With the weakening of demand from China the base metals market is affected the most. Aluminum prices are also very volatile and could decline further as energy costs are falling. We feel that Zinc and Lead prices too could decline further and test new lows but Nickel prices may find some support. Trading scenario may remain weak as markets are bearish over the economic performance.

Crude Oil
Crude Oil prices bounced back in the last week, as weakness in dollar and expectation of production cut by OPEC supported oil prices. Crude Oil prices touched a weekly high $49 per barrel. Dollar fell sharply against its counterparts, as a surge in initial claims and other negative US economic data put greenback under heavy selling pressure.

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