MUMBAI (Commodity Online): Global data emerging from various corners have influenced various commodities including gold.
World Steel Association has said that global steel demand in 2010 will increase by 9.2 per cent. Strong growth in Chinese production is set to raise the level of output. Several expert agencies such as Macquarie Commodities Research have also forecast global steel production in 2010 will grow by about 10 per cent, spurred by Chinese growth as a result of which steel volumes would return to levels similar to 2008.
On Friday, IMF said there were encouraging signs of an economic recovery in the US and several European economies. However, it warned that government stimulus should remain in place until unemployment peaks, which may be 10-12 months away.
The US dollar that went on a depreciating spree reversed direction last week. It is unclear if it is sustainable. Currency factor is increasingly seen impacting commodities in general and gold prices in particular.
Last week saw profit-taking in the yellow metal following the dollar gaining strength and weak equity markets. Prices dipped below $1,030 an ounce during the week, only to bounce back towards the week-end.
In London on Friday, gold PM Fix was at $1,040/oz, virtually unchanged from previous day’s $1,040.50/oz. Silver defied the trend. On Friday the AM Fix was at $16.57/oz, up from $16.33/oz the previous day.
Going forward, further profit taking in gold looks likely, especially if the dollar strengthens. However, a strong technical picture and widespread expectation that the dollar would weaken can buoy prices. Experts are now asserting gold’s new-found broad appeal for investors and are revising their price forecast for Q1 and Q2 of 2010 upwards.
Although the recovery signals are turning increasingly pro-growth, there still are uncertainties along the road. Until a clearer picture generating confidence that recovery would be sustained emerges, commodity prices – especially energy and metals – will remain sensitive to data flows. In other words, expect heightened volatility over the next two months.
Analysts and experts are bullish on coking coal. A majority expectation is that prices could settle above $175 a tonne, on the back of strong import demand growth in China.
