Mixed Trend In Base Metals, Copper Falls On Firm Dollar: April 5, 2012

The base metals complex delivered a mixed performance on the LME on Tuesday with copper, aluminium and nickel ending in the red while lead and zinc ending in the positive territory.

Base metals came under pressure mainly after Federal Reserve policymakers backed away from the need for another round of monetary stimulus.

In addition to this, strength in the US Dollar Index and a rise in risk aversion in the global markets also acted as a negative factor for the metal prices yesterday.

Copper

Copper declined by 0.2 percent on the LME on Tuesday taking cues from rise in LME inventories of copper coupled with Federal Reserve’s decision for not going for further monetary stimulus.

Copper inventories rose sharply by 1.2 percent to 260,650 tonnes on the LME warehouses yesterday. Additionally, a stronger Dollar Index and weak market sentiments also acted as a negative factor for the red metal prices.

MCX Copper April contract decline around 0.2 percent and closed at Rs. 438.35/kg on Tuesday after touching an intra-day low of Rs. 437.30/kg.

Crude Oil Weighs Down On Rising US Inventories

Nymex crude oil prices declined by 1.2 percent yesterday on the back of more-than-expected rise in US crude oil inventories as per the American Petroleum Institute data.

Additionally, a stronger dollar index and Fed’s decision for not going for monetary easing exerted downside pressure on the prices of the commodity.

Oil prices touched an intra-day low of $103.59/bbl and closed at $104/bbl in yesterday’s trading session.

On the MCX, prices declined by 0.7 percent and closed at Rs.5,298/bbl after touching an intra-day low of Rs.5,291/bbl on Tuesday.

API Inventories Data

As per the American Petroleum Institute (API) report released yesterday, US crude oil inventories increased more than expected by 7.8 million barrels for the week ending on 30th March 2012.

Gasoline inventories fell by 4.5 million barrels and whereas distillate inventories also declined by 1.4 million barrels for the same week.

EIA Inventories Forecast

The US Energy Department (EIA) is scheduled to release its weekly inventories report today at 8:00pm IST and US crude oil inventories is expected to rise by 2.2 million barrels for the week ending on 30th March 2012.

Gasoline stocks are expected to decline by 1.4 million barrels whereas distillate inventories are also expected to fall by 0.4 million barrels for the same period.

Precious Metals Decline On US Economic Concerns

Gold prices declined almost 2 percent in yesterday’s trading session as the minutes of the US Federal Reserve's last policy meeting indicated that the Fed will not go for further monetary stimulus unless the US economic growth weakens to less than 2 percent.

This led to strength in the US Dollar Index and also resulted in weak sentiments in the global markets. This exerted downside pressure on gold prices and it touched an intra-day low of $ 1638.74/oz on Tuesday.

On the MCX, Gold June contract traded slightly higher by 0.1 percent and touched an intra-day high of Rs. 28,044/10 gms on Tuesday.

Silver

Strength in the US Dollar Index coupled with choppy sentiments in the global markets exerted downside pressure on silver prices on the international markets on Tuesday. Additionally, the white metal prices also took cues from fall in gold prices and mixed performance in base metals pack.

Spot silver prices touched an intra-day low of $32.45/oz and closed at $32.62/oz yesterday. MCX Silver May contract ended on a flat note and touched an intra-day low of Rs. 57,103/kg on Tuesday.