Gold, Silver Prices Weaken, Nymex Crude Slips On Rising Inventory

European markets traded lower today on the back of failure of Greece’s largest party to create an agreement on a newly formed government after election. This increased uncertainty over eurozone efforts to tackle with the debt crisis which resulted rise in risk aversion in the global markets.

Spot gold prices came under pressure today on the back of strength in the US Dollar Index coupled with rise in risk aversion in the financial markets. The yellow metal touched an intra-day low of $1624/oz and was hovering around $1626/oz till 4.30 pm IST. MCX Gold June contract dropped around 0.3 percent and was trading at Rs. 28,865/10 gms till 4.30 pm IST today.

Taking cues from fall in gold prices coupled with downside in base metals pack, spot silver prices traded sharply lower by 1.5 percent till 4.30 pm IST today. Additionally, weak sentiments in the global markets due to rising eurozone concerns also acted as a negative factor for prices. The white metal touched an intra-day low of $ 29.52/oz and was hovering around $29.58/oz till 4.30 pm IST. MCX Silver July contract slipped almost 1 percent and hit an intra-day low of Rs. 55,172/kg till 4.30 pm IST today.

The base metal pack erased its earlier gains and traded lower today on the back of rise in risk aversion in the global markets coupled with a stronger dollar index. Copper, the leader of the base metals, declined by 0.8 percent after touching an intra-day low of $8110/tonne and hovered at $8130/tonne till 4:30pm IST. On the domestic bourses, prices declined by 1.1 percent and was trading at Rs. 437/kg till 4:30pm IST today..

Nymex crude oil prices slipped more than 1 percent today on the back of expected rise in US crude oil inventories which are at highest level in 21 years. Additionally, a stronger Dollar Index and rising worries over Europe’s debt crisis also led further downside in oil prices. Crude oil touched an intra-day low of $ 96.71/bbl and hovered at $ 96.83/bbl today till 4:30pm IST. On the MCX, oil prices declined by 0.4 percent and was trading at Rs. 5168/bbl after touching an intra-day low of Rs. 5148/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 increase by 2.0 million barrels for the week ending on 4th May 2012.

Escalating tensions over Europe’s debt crisis with Greece being the matter of concerns has led to rise in risk aversion in the global markets today. On account of this, we expect precious metals, base metals and crude oil prices to trade with a negative bias in the evening session. Additionally, strength in the US Dollar Index will also exert further downside pressure on commodity prices. Expected rise in US crude oil inventories will also act as a negative factor for oil prices in the evening session.