Commodity Online
After a gap of 21 weeks, India’s inflation rate eased to single digit at 8.98 percent for the week ended November 1. Meanwhile, Finance Minister P Chidambaram has said that the government is yet to measure the full impact of the global financial crisis. “But we are confident that given the underlying strengths of the Indian economy, we can weather the crisis and still return a decent growth rate for 2008-2009,” he said. Indian economy is likely to expand by 7.4-7.8 percent during 2008/09 fiscal year, slower than 9 percent of last year, as credit crunch and global downturn trims growth, industry bodies said on Friday.

Recession has hit the European shores and EU admitted that the 15 Eurozone countires are in recession for the first time ever. The recession has hit the growth of mining, base metals and crude oil even as gold prices strengthened and witnessed range-bound movements.

Gold
Spot gold prices continue to trading range-bound and we expect the trading range as $680 - $780 levels (this week) that continue to hold for the past 15 trading sessions. The presence of mixed trends in the bullion pack is indicative of indecisiveness in the markets. The Bullion prices are primarily being affected by currency movements and to some extent by crude prices.

The Dollar Index still maintains its uptrend though it appears to be losing its steam. Also, bullion pack is being impacted by the global economic weakness which isn’t appearing to help the bullion pack much. There's still is a push to hold cash amongst the investors community. Technically speaking, gold is range-bound with the overall-trend still remaining down unless we see a daily close above $772/oz.

Crude Oil
Crude Oil prices fell for second week in a row amidst falling global oil demand. Prices touched a 22 month low on Wednesday. Weak macroeconomic data from US and Europe is renewing concern over slow economic growth and weak energy demand. Last week inventory data showed no change in oil stocks, but gasoline and distillates inventory rose more than expected.

Crude Oil prices have closed below its key support level of $60 a barrel, as slumping energy demand is weighing on prices. Due to the economic slowdown in US, Japan and Europe and its spill-over effects on emerging economies, oil demand is expected to contract in coming months. OPEC has decided to cut output, to curb the downside in oil prices. But currently market is more worried about demand destruction than any supply related issues. Factors like stronger dollar, weakening global economy and rising inventory can weigh on oil prices. Oil prices are expected to remain range bound with resistance seen at $64 a barrel in the near term.

Rubber
Natural rubber prices were showing weak to mixed trends throughout the week. It turned weak on Tuesday while global Futures market trend was mixed and there was heavy selling pressure at Tokyo Commodity Exchange.Towards weekend RSS 4 was quoted at Rs 82 for tyre sector while it closed at Rs 82.50 on Tuesday. . Domestic rubber prices turned weak on Tuesday. RSS 4 declined to Rs 84.50 from Rs 85.50 a kg on moderate selling from dealers and growers. The sentiments were hit mainly by a weak closing in global indices.

The revised quote from the tyre sector was further below at Rs 84 a kg for sheet rubber. The trend was mixed. Rubber Futures at Tokyo Commodity Exchange witnessed liquidation during Friday afternoon.The market was better followed by short covering and fresh buying at the opening. Sentiments were firm on early trades amidst gains in oil and precious metals futures coupled with Yen’s decline against dollar.

The Automotive Tyre Manufacturers Association (ATMA) has appealed to the government to reduce the customs duty on natural rubber – the principal raw material of tyre industry – from 20 per cent to 7.5 per cent, lower than the duty on finished product – tyre. The customs duty on tyre is 10 per cent. In fact, tyres can be imported at lower rates under various Regional Trade Agreements. For instance, under the Asia Pacific Trade Agreement, tyres can be imported from China and South Korea at a customs duty rate of 8.6 per cent.

  Continued...