Gold, Silver, Base Metals and Crude Oil Post Gains

The European economy witnessed a decline in GDP for the fourth quarter 2011 for the first time in almost 3 years. The debt crisis in the 17-nation Euro Zone coupled with crippled efforts by the European policymakers to deal with the crisis has led to slowdown in the region.

GDP for the fourth-quarter 2011 slipped 0.3 percent as against a rise of 0.1 percent in the previous quarter.

But European equities are trading in the green today despite the news of slowdown as China has assured to help Europe with its debt crisis.

Overall, Asian equities also closed in the positive territory and the Dow Jones stock futures are also trading higher.

Spot Gold prices increased 0.3 percent today on the back of a weaker dollar. The yellow metal touched an intra-day high of $1729.30/oz and is currently trading around $1724.69/oz till 4:30pm IST.

Taking cues from rise in gold prices and upside in base metals, spot silver prices increased by 0.3 percent till 4:30pm IST today. Additionally, a weaker dollar also acted as a positive factor for the commodity. The white metal touched an intra-day high of $33.80/oz and was hovering around $33.64/oz till 4:30pm IST.

Nymex crude oil prices increased by 0.7 percent today on the back of China’s promise to help in solving the European debt crisis. This has helped ease concern over demand for crude oil. However, sharp upside in prices was restricted on account of expectations of rise in US crude oil inventories. On the MCX, crude oil prices increased 0.4 percent and are trading around Rs.5024/bbl till 4:30pm IST.

The US Energy Department (EIA) is scheduled to release its weekly inventories report today and crude oil inventories are expected to rise by 1.5 million barrels for the week ending on 10th February 2012.

The base metals complex traded on a mixed note today despite optimism over China’s move to support the ailing European region.

Copper prices on the LME increased around 0.4 percent till 4.30pm IST and the red metal is trading around $8419/tonne.

Outlook

Although European GDP data has come on a negative note, move by China to offer help to the European region is expected to support demand for higher-yielding and riskier investment assets. This is expected to lead to weakness in the US Dollar.

On account of dollar weakness and high risk appetite, we expect precious metals and base metals to trade on an upbeat note today.

Crude oil prices are also expected to trade higher but sharp gains will be capped if the weekly inventories rise as per expectations.