By Deepak Rangan
At the Multi Commodity Exchange of India (MCX), precious metals and energies posted solid gains for the week Feb 06- Feb 10, 2012. Base metals weakened except for copper which rose over 1%. In India, Commodity Transaction Tax once again sparked debate as the FICCI and ASSOCHAM opposed the government's proposed move. Indian IIP numbers came out much weaker than expected, dampening investor confidence.
In China, inflation data came at 4.5% in January, rebounding from lows and driven mainly by soaring food prices. In Europe, policymakers are still grappling to find a solution for Greek debts and all the week passed without any significant resolution coming out with regard to the matter. In the US, consumer sentiment is still low, indicating possible decline in spending and Fed Chairman Ben Bernanke stated that the housing market is continuing to hurt the US economy.
Precious Metals
-Both gold and silver returned gains for the week, mainly on the back of uncertainty in the Eurozone- the dragging Greek debt issue. High Chinese inflation and low Indian IIP numbers also added to the cause. China and India are the world's top gold buyers and these negative reports increased money flows into precious metals.
Base Metals
-Base metals were affected by high Chinese inflation. Only copper was able to hold out. But its outlook looks weak with Chinese inventories reported to be at high levels. Smelters in China are also said to be looking to export copper due to weak domestic demand.
Energies
-Crude oil appreciated on Iran tensions. India and Iran agreed for 45% Rupee payments for Iran oil. Iran is also reported to be sourcing food from Europe by paying in gold and oil. Meanwhile, Saudi Arabia has stepped up and assured S Korea to compensate for any loss of Iran oil.
-Natural gas futures gained, on what mainly believe as a technical buying. With supplies high, outlook remains weak.
