Precious Metals Settle Higher on Weak US Dollar

Spot gold prices rose sharply by around 3 percent in the last week mainly on the back of weakness in the US dollar, as a weaker dollar makes dollar-denominated commodities look attractive for holders of other currencies.

Moreover, rally in crude oil prices also fuelled inflation-led demand for gold which provided further support for prices.

Gold touched a three-month high of $1787/oz last week and ended its trading session at the level of $1772/ on Friday.

On the MCX, the yellow metal prices rose around 2.1 percent as further gains were capped due to a stronger Rupee last week.

Silver

Silver outperformed gold and surged more than 6.5 percent in the last week mainly taking cues from rise in gold prices along with upside in base metals.

Additionally, dollar weakness also acted as a positive factor for silver. The white metal hit a high of $35.70/oz last week and ended its trading session at $35.37/oz on Friday.

On a week-on-week basis, MCX Silver March contract rallied almost 4.5 percent and touched a high of Rs58,888/kg.

Base Metals Edge Higher on Weak Dollar, Positive Economic Data

On a weekly basis, the base metals complex delivered an excellent performance on the LME platform.

Weakness in the US dollar and positive economic data from the US, the world’s largest economy, helped prices to move in the northward direction.

Additionally, expectations of ECB’s step to inject huge amount into banks also acted as a positive factor. However, appreciation in the Indian Rupee capped sharp gains on the domestic bourses last week.

Copper

Copper prices rose sharply by almost 4 percent on the LME on the back of fall in the copper inventories, deficit in the copper market and a weaker dollar.

According to the International Copper Study Group (ICSG), world refined copper market experienced a deficit of 382,000 tonnes in the first eleven months of 2011 as against a deficit of 460,000 tonnes in the same period a year ago.

Lead
 
Lead was the top performer amongst the base metals pack last week, as the metal rose sharply by more than 8 percent on the LME and by 7 percent on the MCX.

Sharp drop in LME lead inventories and dollar weakness helped upside in metal prices. Lead inventories on the LME warehouses dropped sharply by 2.5 percent to 370,500 tonnes last week.

Crude Oil Remains Higher on Positive US Economic data

On a weekly basis, Nymex crude oil prices increased sharply by almost 6 percent taking cues from supply concerns from Iran coupled with positive economic data from the US.

Additionally, a sharp decline in the US Dollar Index (DX) also acted as a positive factor for the commodity.

Oil prices touched a nine and a half month high of $109.95/bbl during the week and closed at $109.77/bbl on Friday.

On the MCX, crude oil prices gained by 5.7 percent and closed at Rs.5372/bbl on Friday after touching a high of Rs.5384/bbl during the week.

Natural Gas

Nymex natural gas prices declined by 5.3 percent during the week on the back of expectations of mild winter weather coupled with less industrial demand for the commodity.

Gas prices touched a low of $2.512/mmbtu during the week and closed at the level of $2.548/mmbtu on Friday.

On the MCX, Natural Gas March contract dropped sharply by 8 percent on the back of appreciation in the Indian Rupee and closed at Rs.123.6/mmbtu last week.