Commodity Online
Globally, many commodity futures group tumbled sharply last week as speculators felt that the proposed $700 bn bailout programme may not be enough to stop economies from plunging into recession.

Huge price declines were visible in precious metals, industrial metals, energy markets, rubber futures. Most commodity futures groups took a sharp tumble midweek as speculators considered the troubling prospect that the proposed $700 million bailout may not be enough to stop world economies from plunging into a severe recession.

India's inflation rate softened to below 12 percent to a three-month low giving more room to the to Reserve Bank of India to keep interest rates on hold.

Gold
Gold prices fell sharply in the last week, after US senate approved $700 billion bailout plan, which boosted dollar against major currencies. Weakness in oil prices also weighed on gold prices. The US Senate approved the revised bail-out plan on Wednesday night to stabilize the financial industry, just two days after the House of Representatives rejected the original package. Spot gold touched a low of $825 per ounce, falling from a high of $926. We expect gold prices to trade on a volatile note in the near term amidst current financial turmoil as the financial markets appear to be undecided on the likely impact of the bail-out plan. In the long term, we maintain bullish outlook on gold. We expect gold prices to remain bullish in coming months and expect international gold price to touch $950.

Crude Oil
Crude oil prices fell sharply in the last week, as stronger dollar against major currencies and concerns over weakening oil demand weighed on oil prices. Last Wednesday’s inventory data showed more than expected rise in crude oil stocks and surprise build up in gasoline stocks, which put pressure on oil prices. Rise in jobless claims and fall in factory orders renewed concern over economic slowdown in US, also pull oil prices lower. The global economic scenario remains gloomy which is impacting the overall demand along with the US consumption is expected to decline further amidst current financial turmoil. Financial bailout plan may not help to avert looming recession in US. With the financial crisis engulfing European economies, one has to wonder whether demand from Asian countries can be maintained, which is the last hope for the bulls. All this could lead to fall in energy demand in the medium term. Under such situation we expect that trend in oil prices can remain bearish in the medium term with a price target of $86.50 per barrel.

Base metals
The base metals pack was hit badly on the LME on the back of heavy liquidation selling that came in due to a gloomy global economic environment. Economic news out of Europe was also grim and that took the US Dollar Index to a high of 80.79, pulling dollar denominated commodities lower. The strength in the dollar is making base metals look unattractive for holders of other currencies. Trading activity in the base metals market is expected to remain volatile as macroeconomic worries and the global slowdown is raising questions over demand. Major concern over demand from China is expected to pull the complex lower. The impact of the US economic bailout shall pay a key role in setting future price direction. Copper prices touched a low of $5,765 on last Thursday and the metal is facing tremendous pressure on the downside. Prices are weak on the back of concerns over demand from China and the strength in the US Dollar is making the red metal unattractive. Slowdown in economic activity in the Euorzone is making the Euro weaker and this factor is pushing the US Dollar Index higher.

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