Base Metals, Nymex Crude Oil Weakened, Gold Up Marignally

European equities are trading on a negative note today on the back of escalating eurozone debt concerns with expectations of the global economic slowdown. Asian markets ended on a mixed note and US stock futures are trading in the red. German Producer Price Index (PPI) declined by 0.4 percent in June as against a previous decline of 0.3 percent in May. UK’s Public Sector Net Borrowing was at 12.1 billion pounds in June from previous level of 16.1 billion pounds a month ago.

Spot gold prices gained around 0.1 percent today. However, a sharp upside in prices was capped on the back of strength in the US Dollar Index (DX). The yellow metal touched an intraday high of $1,586.80/oz and hovered around $1,582.46/oz till 4:30pm IST today. On the MCX, the Gold August contract gained by 0.2 percent on account of depreciation in the Indian rupee and were trading around Rs.29,212/10 gms today.

Taking cues from the downside in base metals, Spot Silver prices declined around 0.6 percent today. Additionally, strength in the DX also acted as a negative factor for the silver prices. In the Indian markets, the sharp downside in prices was cushioned on the back of depreciation in the Indian rupee.

The base metals pack traded lower today on the back of negative global market sentiments along with strength in the DX. Copper, the leader of the base metals complex, declined by 1.4 percent today on account of weak global market sentiments coupled with stronger DX. Additionally, rise in LME Copper inventories by 0.3 percent which stood at 253,225 tonnes also exerted downside pressure on the prices.

The red metal touched an intraday low of $7,653/tonne and hovered around $7,658/tonne today till 4:30pm IST. On the domestic front, prices declined by 1.1 percent and were trading around Rs.425.95/kg today. Nymex crude oil prices declined around 1.3 percent today taking cues from expectations that demand for the fuel will decline after more than estimated unfavorable economic data from US and euro region.

Additionally, a stronger DX also exerted downside pressure on the crude oil prices. It touched an intraday low of $91.36/bbl and was trading around $91.45/bbl today. On the domestic bourses, prices declined around 0.9 percent and hovered around Rs.5,080/bbl after touching an intraday low of Rs.5,075/bbl today till 4:30pm IST.

In the evening session, we expect precious metals, base metals and crude oil prices to trade on a negative note on the back of rise in risk aversion in the global markets along with strength in the DX. However, any positive outcome from Eurogroup meetings can cushion a sharp fall in prices or even a reversal in the commodity prices.