Base Metals Pack Upbeat, Nymex Crude Oil Rises 1.8%

European equities are trading on a positive today on the back of expectations of cut in interest rate by  the European policymakers coupled with ease in monetary policy by China to boost economic growth. Asian markets ended on a bullish note and US stock futures are trading on a flat note.

Spot gold prices increased around 0.8 percent today on account of rise in risk appetite in the global markets. Additionally, weakness in the US Dollar Index (DX) also helped upside in the gold prices. The yellow metal prices touched an intra-day high of $1611.10/oz and hovered around $1608.84/oz today till 4:30pm IST. On the domestic front, prices declined around 0.3 percent today on the back of appreciation in the Indian Rupee and was trading around Rs.29,578/10 gms today.

Taking cues from rise in gold prices coupled with upside in base metals complex, spot silver prices increased around 1.7 percent today. Additionally, weakness in the DX also acted as a positive factor for the silver prices. The white metal prices touched an intra-day high of $28.01/oz and were trading around $27.95/oz today. On the MCX, silver July contract gained around 0.5 percent and hovered around Rs.52,394/kg after touching an intra-day high of Rs.52,435/kg today till 4:30pm IST.

The base metals pack traded on an upbeat note taking cues from decline in LME inventories coupled with weakness in the DX. Additionally, positive global market sentiments also helped upside in prices. Copper, the leader of the base metals group increased around 2 percent today on account of decline in LME copper inventories by 0.4 percent and stood at 255,175 tonnes. In the Indian markets appreciation in the Indian rupee restricted further upside in prices and gained around 0.8 percent today.

Nymex crude oil prices increased around 1.8 percent today taking cues from expectations of interest rates cut by European Central Bank (ECB) along with ease in monetary policy from China which will increase demand for the fuel. Additionally, expectations of decline in US crude oil inventories coupled with weakness in the DX also acted as a positive factor for crude oil prices.

The American Petroleum Institute (API) is scheduled to release its weekly inventories today and US crude oil inventories are expected to decline by 2.2 million barrels for the week ending on 29th June 2012.

In the evening session, we expect precious metals, base metals and crude oil prices to trade on a positive note on account of rise in risk appetite in global markets, expectations of cut in interest rates by the European policymakers and ease in China’s monetary policy. 

Additionally, weakness in the DX coupled with favorable factory orders from the US economy will support upside in prices. In case of crude oil, further upside in prices would be supported on the back of  expectations of decline in  the US crude oil  inventories.