Gold, Copper And Crude Oil Prices Witness Recovery: April 17, 2012

European markets traded higher on the back of increased demand at the Spanish debt sale coupled with positive economic data from the eurozone front.

German investor confidence index rose unexpectedly to a two-year high to 23.4-mark in April from the previous level of 22.3 in March. ZEW Economic Sentiment in the eurozone also rose unexpectedly to 13.1 in April as compared to 11-mark in the prior month.

Additionally, Spain sold 3.18 billion euros of bills today as compared to a maximum target of 3 billion euros that the Treasury set for the sale. Spain sold 12-month and 18-month bills at 2.623 percent and 3.11 percent respectively.

These factors led to rise in risk appetite in the European markets. US stock futures are also trading in the green as investors awaited for housing starts and industrial production data from the US which are expected to come on a positive note. Spot gold prices erased its earlier losses and was trading higher by 0.2 percent till 4.30 pm IST today.

Revival in the global markets due to favorable economic data from the eurozone and weakness in the US Dollar Index supported upside in the yellow metal prices. Gold touched an intra-day high of $1655.90/oz and was trading at $1654.41/oz till 4.30 pm IST.

Taking cues from rise in gold prices and recovery in the global market, spot silver prices witness gains of around 0.7 percent and hit an intraday high of $31.72/oz till 4.30 pm IST. However, appreciation in the Indian rupee capped further gains on the domestic platform and touched an intra-day high of Rs. 56,167/kg till 4.30 pm IST.

Rise in Spanish debt demand, favorable economic data from eurozone front, improved market sentiments and a weaker dollar index helped base metals to recover from the earlier losses and trade higher on the LME with zinc being an exception.

Zinc prices dropped around 0.5 percent on the LME and by 0.3 percent on the MCX till 4.30pm IST today. LME inventories of zinc rose 1.1 percent to 912,150 tonnes today and this acted as a negative factor for the metal prices.

Nymex crude oil prices gained by 0.6 percent today taking cues from the news of reversal in Seaway pipeline coupled with improved economic data the Europe. However, further gains were capped due to expected rise in US crude oil inventories.

Oil prices touched an intra-day high of $103.77/bbl and hovered around $103.61/bbl today till 4:30pm IST. The American Petroleum Institute (API) is scheduled to release its weekly inventories today and US crude oil inventories are expected to increase by 1.6 million barrels for the week ending on 13th April 2012.

Revival in the global markets due to favorable economic data from the eurozone and expected positive housing starts and industrial production data from the US will lead to weakness in the US Dollar Index.

Taking cues from this, precious metals and base metals are expected to trade with a positive bias in the evening session.

We expect crude oil to trade with a sideways bias in the evening session, as on one hand expected rise in US crude oil inventories will act as a negative factor while on the other hand, revival in the global markets and weakness in the US Dollar Index may provide upside support.

However, concerns over Europe’s debt worries still persist and any negative news or development from the eurozone and any negative economic data from the US may lead to reversal in the markets.