Base Metals Trade Up on Positive Economic Concerns

The base metals complex traded higher on the LME on Tuesday on the back of favorable economic data from the US and Euro Zone.

Additionally, rise in risk appetite in the global markets also acted as a further supportive factor for metal prices yesterday. However, further gains were capped due to strength in the US dollar on Tuesday.

Copper

Copper, the leader of the base metals pack, rose more than 1 percent on the LME as well as on the MCX on Tuesday. Factor that influenced the red metal prices are continuously fall in LME copper inventories coupled with upbeat market sentiments due to positive economic data from the US.

Copper inventories hit a two and a half year low level of 273,000 tonnes on the LME warehouses on Tuesday. On a w-o-w basis, inventories dropped sharply by 3.7 percent and on a year to date basis, stocks declined sharply by 27 percent.

Outlook

Base metals are expected to trade higher today, as positive economic data from the US and rise in risk appetite in the global markets will act as a supportive factor for metal prices.

Crude Oil Edges Higher On Us Economic Data

Nymex crude oil prices increased by 0.3 percent yesterday taking cues from the positive economic data from the US and European regions. However, further upside in prices was restricted on account of rise in US crude oil inventories coupled with a stronger dollar.

Oil prices touched an intra-day high of $107.35/bbl and closed at $106.7/bbl on Tuesday. On the MCX, crude oil prices increased by 0.2 percent and closed at Rs.5341/bbl after touching an intra-day high of Rs.5358/bbl yesterday.

API Inventories Data

As per the American Petroleum Institute (API) report released yesterday, crude oil inventories increased by 2.78 million barrels for the week ending on 9th March 2012. Gasoline inventories fell by 2.1 million barrels and whereas distillate inventories also slipped by 3.5 million barrels for the same week.

EIA Inventories Forecast

The US Energy Department (EIA) is scheduled to release it weekly inventories report today and US crude oil inventories are expected to increase by 1.7 million barrels for the week ending on 9th March 2012. Gasoline stocks are expected to decline by 1.0 million barrels whereas distillate inventories are expected to fall by 1.3 million barrels for the same period.

Outlook

We expect crude oil prices to trade on a rangebound note today, taking mixed cues from expected rise in US crude oil inventories, supply concerns from Iran and upbeat market sentiments.

Precious Metals Decline On Firm Us Dollar Index

Spot gold prices declined sharply by 1.5 percent on Tuesday on the back of strength in the US dollar, as a stronger dollar makes dollar denominated commodities look expensive for the holders of other currencies. The yellow metal touched an intra-day low of $1661/oz and ended at the level of $1674/oz on Tuesday.

MCX Gold April contract declined around 0.7 percent in yesterday’s trading session and touched an intra-day low of Rs27,760/10 gms. The yellow metal ended its trading session at the level of Rs27,832/10 gms on Tuesday.

Silver

Spot silver prices dropped around 0.5 percent on Tuesday, taking cues from fall in gold prices coupled with dollar strength. Silver being an industrial metal also took cues from rise in base metals pack which cushioned sharp decline in silver prices yesterday.

The white metal touched an intra-day low of $32.97/oz and closed at the level of $33.6/oz on Tuesday. MCX Silver May contract rose around 0.1 percent yesterday after touching an intra-day high of Rs58,666/kg and closed at Rs.58,470/kg.

Outlook

Gold and silver are expected to trade higher today on account of a weaker dollar. Silver will also take cues from rise in gold prices and movement in base metals.