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India's better performance on exports in the year-end was possilble due to 40% growth in gems and jewellery and healthy growth in ready made garments exports. Base metals, crude oil and rubber continues to be bullis..
20 Dec 2009

Commodity Online
India’s exports have shown a healthy growth towards the end of the year with gems and jewellery, ready made garments and petroleum products faring better than others. Gems and jewellery exports recorded a growth of 40 percent to USD 2.15 bn while readymade garment exports rose to US 727 mn from USD 686 mn on an annualized basis.

India Government has said that the GDP growth could top 7.75% this fiscal (2009-10) even as food inflation continues to cause concern to policy makers.

The U.S. dollar gained broadly on Friday on improved economic sentiment and a safe-haven bid after Iranian soldiers crossed into Iraq and took up positions in a disputed southern oilfield, which also lifted oil prices. The euro fell below $1.43 for the first time since early September, flushing out short dollar trades, while the dollar rose for a fourth consecutive day against the Japanese yen.

Gold prices continued its downward journey as profit booking coupled with a sharp rally in the US Dollar against other major currencies sent gold prices in the southward direction. Spot Gold prices breached the $1100 psychological mark last week after witnessing a recent all-time high of $1226.65 levels. With US inflation numbers for November coming below expectations, fears of a sharp run-up in inflation appear to have subsided in the short-term. Further, US Federal Reserve has hinted towards a tightening of the money supply beginning early next year could be supportive for the US Dollar, which in turn could impact bullion prices negatively.

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Gold & the Dollar share an inverse relationship which is taking a toll on gold prices. Investment buy, central bank buying at these levels is very essential for maintaining prices at current levels as jewellery/fabrication demand has been hit globally on account of historic high prices. Spot Gold has crucial support around $1190 - $1195 zone and were prices to trade lower, then we are likely to witness a sharp correction towards the $1030 mark. On the upside, crucial resistance is seen around $1142 levels. MCX Gold February Contract shall find a strong support at 16690/16540 and resistance at 17125/17400 levels in the coming week.

Base Metals
It was a week of mixed fortunes for base metals lead by Copper. Copper futures settled higher on Friday despite a stronger dollar as labour issues in Chile supported the red metal.Copper found some support Friday from impending strike action at Chile's Altonorte smelter. Anglo-Swiss miner Xstrata PLC (XTA.LN) said it will ask the Antofagasta Labor Inspectorate to mediate negotiations at its Altonorte Metallurgical Complex in northern Chile after workers Thursday rejected the company's latest wage offer.

Inventories of copper stored in London Metal Exchange warehouses rose 1,775 metric tons Friday, leaving them at 476,350. Once-a-week data released on Fridays by the Shanghai Futures Exchange showed a weekly rise of 8,701 metric tons to 104,377. The most recent Comex inventory data, released late Thursday, were up 640 short tons at 96,105 short tons.

Base metals prices dipped ocassionally in the week due to dollar strength and LME copper closed for most days below the $7000 mark. Improved economic data from US is supportive of base metals rally.
Aluminium inventories have reached record highs in the wake of the automotive sector downturn following last year's credit crunch - the light metal is a major component in car bodies.

Spurred by huge demand from power, telecommunication and housing sectors, India’s copper consumption is likely to rise 5-6 per cent this year. The three sectors account for 65 per cent of the total demand in India. At this growth rate, India’s total copper consumption will hit 550,000 tonnes next year, as the red metal, despite cheap alternatives, remains the preferred choice for electricity, industrial machinery and equipment, consumer electronics and construction industries. The metal also finds applications in hospitals due to its anti-bacterial properties.

Base metals will continue to take cues from US economic data and the movement in the dollar. The complex will take cues from the dollar, movement in equities and the LME inventories. As year-end trade begins to surface, investors may book profits and base metals may remain vulnerable to further price moves in both directions.

Crude Oil
Nine days of continuous fall in crude oil prices was halted on Tuesday when US crude futures gained on speculation that US crude inventory is expected to witness a drop and larger than expected increase in industrial production would create a bullish trend in energy prices.

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