Copper, Oil and Gold Decline on Dollar Strength

Asian equities traded in the green today on the back of optimism over US economic recovery. But European equities are trading on a mixed note while US stock futures are trading lower.

Latest economic data from Spain indicated that, unemployment in Spain touched 4.7 million in February, marking an increase of 112,269 from the previous month. Government figures indicate that the number of jobless has jumped by 412,835.

The US Dollar Index (DX) has strengthened today by 0.5 percent till 4.30pm IST as signs of economic growth in the US has led to expectations of no further quantitative easing, which led to support to the DX. Also, European economic concerns continue and this factor too is negative for the Euro for a long-term perspective. Till 4.30pm IST, the Euro has slipped around 0.5 percent and is currently trading around 1.3241 today.
 
Spot Gold prices came under pressure today as a stronger dollar added pressure on prices. But prices on the domestic bourses increased around 0.2 percent till 4.30pm IST as a weaker Rupee supported upside. Taking cues from gold, silver prices also fell in the international markets, but are trading in the green on the MCX.

Copper prices on the LME are trading around $8611/tonne, losing 0.2 percent till 4.30pm IST. Inventories of the red metal declined around 1.1 percent on the LME warehouse and on the Shanghai, weekly inventories gained 2.5 percent. Inventories in China are witnessing an increase but expected reversal in monetary policy is expected to support demand in the coming months.

Oil prices on the Nymex fell 0.4 percent till 4.30pm IST as a strength in the dollar coupled with news that Saudi Arabia has denied a reported pipeline explosion in the country’s eastern province. However, prices on the MCX gained 0.5 percent till 4.30pm IST as Rupee depreciation helped support upside.

Outlook

We expect precious metals and base metals to trade lower today mainly taking cues from strength in the US dollar coupled with weak sentiments in the global markets.

In case of crude oil, we expect crude oil prices to trade with a sideways bias on account of a stronger dollar, mixed market sentiments and ongoing supply worries from Iran.