MCX Base Metals Trade Negative, Nymex Crude Falls 1.4%: April 10, 2012

China's annual inflation rose more than expected to 3.6 percent in March from the previous 3.2 percent in February. This led to rise in risk aversion in the global markets today. The country’s Producer Price Index (PPI) declined by 0.3 percent in the month of March.

Spot gold prices traded higher till 4:30 pm IST today on the back of China’s inflation data which fueled inflation-led demand for gold. However, sharp gains were capped due to strength in the US Dollar Index (DX) coupled with choppy market sentiments.

The yellow metal hit an intra-day high of $1648/oz and was trading at $1641.28/oz until 4:30 pm IST today. MCX Gold June contract rose around 0.8 percent on account of depreciation in the Indian Rupee and was hovering around Rs. 28,312/10 gms till 4:30 pm IST.

Silver prices came under pressure today on the international markets, taking cues from a stronger Dollar Index and rise in risk aversion in the global markets. The white metal touched an intra-day low of $31.55/oz and was hovering around $31.63/oz till 4.30 pm IST. On the MCX, the Silver May contract declined by 0.2 percent touching an intra-day low of Rs. 55,966/kg and was trading at Rs. 56,071/kg until 4:30 pm IST today.

The base metals complex on the MCX traded on a negative note today, with copper being the worst performer of the day. The red metal declined more than 1 percent on the MCX and touched an intra-day low of Rs. 425.20/kg until 4:30 pm IST today. However, less volatility was observed in trading of base metals on the MCX today as the London Metal Exchange is closed for the Easter Holiday.

Nymex crude oil prices declined around 1.4 percent today on the back of the news that Iran is ready to resume its nuclear talks with the US which may ease supply concerns. Additionally, a stronger dollar index also acted as a negative factor. Oil prices touched an intra-day low of $101.66/bbl and hovered around $101.88/bbl today till 4:30pm IST. MCX crude oil prices declined by 0.8 percent and was trading at Rs. 5240/bbl after touching an intra-day low of Rs. 5236/bbl until 4:30pm IST.

We expect gold to trade with a positive bias in the evening session today, as a sharp rise in China’s annual inflation will lead to boost inflation-hedge demand for gold. Silver is expected to trade lower on account of a stronger Dollar Index. In the evening session, we expect crude oil prices to trade with negative bias on the back of sluggish demand growth from China along with strength in the Dollar Index.

Base metals complex are expected to trade lower on the MCX today. However, less volatility will be observed in trading of base metals today as the London Metal Exchange is closed for the Easter Monday Holiday.