Crude Oil Continues Decline, Base Metals Trade Positive

European equities traded on a mixed note today on the back of decline in European retail sales and German factory orders. Asian markets traded on a positive note and US stock futures are trading on a flat note. European Final Services PMI rose to 46.7-level in last month from 46.5-mark in April. 

European Retail Sales declined by 1 percent in April as compared to previous rise of 0.3 percent a month ago. German Factory Orders declined by 1.9 percent in April with respect to rise of 3.2 percent in March. Spot gold prices traded on a flat note today but further upside in prices was capped on the back of strength in the US Dollar Index (DX). 

The yellow metal touched an intra-day high of $1623/oz and hovered around $1618/oz till 4:30pm IST today. On the domestic front, prices gained by 0.7 percent on account of depreciation in the Indian rupee and was trading around Rs.29,891/10 gm today. Taking cues from rise in gold prices, spot silver prices gained 0.1 percent today. However, further upward movement in silver prices was capped on account of strength in the DX. 

The white metal touched an intra-day high of $28.45/oz and was trading around $28.23/oz till 4:30pm IST today. On the MCX, Silver July contract increased by 0.6 percent on the back of depreciation in the rupee and hovered around Rs.54,182/kg after touching an intra-day high of Rs.54,249/kg till 4:30pm IST today.

The base metals pack traded on a positive note today on the back of depreciation in the Indian rupee, but copper was an exception as the commodity traded lower in the Indian markets. The LME is closed today on account of Queen’s Diamond Jubilee holiday. Nymex crude oil prices declined around 0.2 percent today on account of expectation that European debt concerns will curb demand for fuel. 

This coupled with a stronger DX added pressure on prices. However, sharp fall in crude oil prices was cushioned on the back of expectations of decline in US crude oil inventories and hovered around $83.85/bbl till 4:30pm IST today. The American Petroleum Institute (API) is scheduled to release its weekly inventories today and US crude oil inventories are expected to decline 0.9 million barrels for the week ending on 1st June 2012.

In the evening session, we expect precious metals, base metals and crude oil prices to trade with a positive bias, ahead of Group of seven (G7) meeting. Markets are now looking forward to measures and actions by global policymakers to tackle the crisis and if any news with respect to the same is announced then risk sentiments could improve. Additionally, crude oil prices will get upside support on the back of expectations of decline in US crude oil inventories which are to be released from the API today.