Base Metals, Crude oil trade Negative On Eurozone Worries

European equities are trading on a positive note today on the back of expectations that global policymakers will take necessary steps to revive growth in the economy. Asian markets ended on an upbeat note and US stock futures are trading on a flat note. People’s Bank of China has cut lending bank rates by 25 bps to 6.31 percent and has also cut benchmark bank deposit rates by 25 bps to 3.25 percent. 

The impact of this move is expected to be positive on global financial markets at a time when the global economy is struggling with the European economic crisis. Spot gold prices declined by more than 0.2 percent today, however weakness in the US Dollar Index (DX) cushioned further fall in prices. The yellow metal touched an intra-day low of $1612/oz and hovered around $1615/oz till 4:30pm IST today. 

Taking cues from fall in gold prices along with downside in base metals, Spot silver prices declined  0.4  percent Friday. However, weakness in the DX cushions sharp downside pressure in silver. The white metal touched an intra-day low of $29.16/oz and was trading around $29.27/oz. 

The base metals pack traded on a negative note in today’s session in the international markets. Copper prices declined by 0.5 percent on the LME. However, further downside in prices was cushioned on account of decline in LME copper inventories by 0.8 percent which stood at 229,300 tonnes. The red metal touched an intra-day low of $7,365/tonne and hovered around $7,418/tonne till 4:30pm ISTFriday.

In the Indian markets prices declined on account of appreciation in the rupee and were trading around Rs.407/kg today. Nymex crude oil prices declined by 0.4 percent today on account of less than expected decline in US crude oil inventories. However, Iran’s nuclear talks with the world’s major powers indicated that it will never suspend enrichment of uranium and will not permit any national security for inspection. This factor will lead to supply concerns and support upside in oil prices. 

Crude oil prices touched an intra-day low of $84.51/bbl and were trading around $84.67/bbl today. On the  domestic bourses, prices declined by 0.7 percent and hovered around Rs.4,677/bbl till 4:30pm IST Friday.

European Central Bank (ECB) President Mario Draghi has affirmed to support the economy in this time in order to help recover from the crisis, and the Chinese central bank has also lowered interest rates, while hopes of another round of quantitative easing from the US remain alive. India too has witnessed sharp deceleration in economic growth and Prime Minister Manmohan Singh has indicated investment in infrastructure in order to bring back growth in the Asia’s third-largest economy.

On the back of this, risk sentiments were upbeat Friday and thus support upside in precious metals, base metals and crude oil prices today. In case of crude oil, Iran’s nuclear concerns would additionally support upside in prices.