Gold, Crude Oil Declines, Metals Weak On Rise In LME Inventory

European Equities are trading on bearish note ahead of the European Summit and rise in the Spanish bond yield coupled with weak economic data. Asian markets ended on a firm note while US stock futures are also trading on a bearish note. UK’s Current Account was at a deficit of 11.2 billion pounds in Q1 of 2012 from previous deficit of 7.2 billion in Q4 of 2011. 

Final GDP remained unchanged at deficit of 0.3 percent in Q1 of 2012. German Unemployment Change was at 7,000 in May from previous 1,000 a month ago. European Retail Raw Materials Price Index (RMPI) rose by 5 points to 48.3-mark in current month as compared to previous level of 43.3 in May. Italian Prelim Consumer Price Index (CPI) was at 0.2 percent in June. Spot gold prices declined around 0.3 percent today on the back of strength in the US Dollar Index (DX). 

The yellow metal touched an intra-day low of $1565/oz and hovered around $1569/oz till 4:30pm IST. On the domestic front, downside in the prices were owing to appreciation in the Indian rupee and is trading around Rs.29,897/10  gm till 4:30pm IST. Spot silver prices also declined around 0.2 percent today on account of fall in the base metals pack and gold prices. 

Additionally, strength in the DX also exerted downside pressure on silver prices. The white metal touched an intra-day low of $26.70/oz and was trading around $26.85/oz today. On the MCX, Silver July contract, declined around 0.1 percent and was trading at Rs.52,663/kg after touching an intraday low of Rs.52,540/kg till 4:30pm IST today. Base metal prices traded lower on account of rise in the LME inventories coupled with strength in the DX. 

Copper, the main metal in the complex declined around 0.4 percent today on the back of rise in the LME Copper inventories by 0.5 percent. On the domestic front appreciation in the Indian rupee also exerted downside pressure in the prices. Nymex crude oil prices declined around 0.3 percent on the back of expectations that European debt crisis will worsen further and curb demand for the fuel. Additionally, stronger DX also added downside pressure on crude oil prices. On the domestic bourses, prices declined by 0.4 percent on account of appreciation in the Indian rupee and closed at Rs.4,585/bbl till 4:30pm IST today.

In the evening session, we expect precious metals and base metals to trade on a negative note on the back of rise in risk aversion in the global markets on account of escalating eurozone debt crisis coupled with strength in the DX. However, US unemployment claims and GDP is expected to come on a positive note along with any optimistic news from EU Summit can lead to reversal in the markets.