Base Metals Gain on Weak Dollar, Crude Oil Surges 2.6%

European markets traded higher today after the Europe leaders decided to increase a bailout plan to tackle with the region’s sovereign debt crisis. This led rise in risk appetite in the global markets today.

India’s food inflation accelerates sharply to the highest level in more than six months to 11.43 percent for the week ending 15th October, as prices of vegetables, cereals and pulses, rice, fruits, milk, eggs, meat and fish increased, according to data by the Ministry of Commerce and Industry. Food inflation stood at 10.6 percent in the previous week. The fuel price index declined marginally to 14.7 percent in the same week from the previous level of 15.17 percent.

Spot gold prices declined by 0.5 percent in today’s trade, on account of rise in risk appetite in the global financial markets which reduced safe-haven demand for gold. However, dollar weakness cushioned further fall in the yellow metal prices. It touched an intra-day low of $1705/oz and was trading at $1716/oz till 4.30 pm IST. MCX Gold December contract slipped sharply by 1.2 percent due to Rupee appreciation on the domestic bourses and touched an intra-day low of Rs.27,219/10 gms till 4.30 pm IST today.

Silver prices gained more than 0.5 percent till 4.30 pm IST today taking cues from a weaker dollar coupled with upside in base metals.

The white metal touched an intra-day high of $33.82/oz and was hovering around $33.53/oz till 4.30 pm IST. However, appreciation in the Rupee led silver trade lower by 1.5 percent on the MCX till 4.30 pm IST today.

Upbeat sentiments in the global markets coupled with a weaker dollar helped base metals trade higher on the LME till 4.30 pm IST today.

Appreciation in the Indian Rupee resisted further gains on the domestic platform. Copper was the top gainer of the day, as it rose more than 3.6 percent on the LME and by 0.4 percent on the MCX till 4.30 pm IST. Falling inventories and supply concerns from Indonesia provide support for the red metal prices.

Nymex crude oil surged by 2.6 percent and was trading at $92.52/bbl till 4:30pm IST today, on the back of positive global market sentiments after the European leaders agreed to increase a bailout plan to tame the debt crisis coupled with a weaker dollar. On the MCX, crude oil prices declined by 0.8 percent due to Rupee appreciation and were trading at Rs.4538/bbl till 4:30pm today.

Outlook

Gold is expected to trade lower today, as rise in risk appetite in the global financial markets will affect safe-haven demand for gold. But, a weaker dollar may cushion sharp fall in prices.

Today, silver is expected to trade with a sideways bias, taking mixed cues from fall in gold prices, positive market sentiments, dollar weakness and upside in base metals.

Base metal and crude oil prices are expected to gain in today’s trading session, on the back of upbeat sentiments in the markets due to easing concerns over the Euro Zone debt crisis. This coupled with dollar weakness will act as a positive factor for prices.