Although risk appetite re-emerged on prospects of improvement in the European economic scenario, markets continue to remain volatile as long-term risks associated with the implementation of the latest rescue plan remain.
Also, markets still need to assess the long-term impact of the same as announcements of measures will only help ease short-term concerns but may not necessarily translate into a permanent solution from a longer term perspective.
Spot Gold prices came under pressure today and slipped around 0.3 percent till 4.45pm IST, taking cues from mixed market sentiments over the European crisis. Markets had embraced with positivity the plan announced by the policymakers; but this plan now comes with a baggage of questions that yet need to be answered. Gold also came under pressure on account of profit-booking at higher levels.
Inflationary expectations had supported gold prices yesterday and the yellow metal also took cues from movement in the US Dollar Index (DX) that has slipped sharply during this week.
Spot Silver prices on the other hand remained largely stable today and remained less affected from the mixed sentiments in the global financial markets. Prices in the international markets are currently trading around $35.3/oz.
Copper prices came under pressure today despite hopes of improvement in the European economic scenario as demand concerns emerged. Latest data by the International Copper Study Group (ICSG) indicated that in the first seven months of this year, copper demand in China declined 5 percent. Moreover, further demand slowdown can be expected as economic growth in China is expected to slow. This factor led to downside pressure on prices today and the red metal also saw profit-booking at higher levels. In the past few days, copper prices
have increased sharply and bounced back above the crucial $8000/tonne mark.
Nymex crude oil prices declined by 0.6 percent and is trading around $93/bbl till 4:45pm IST, taking cues from fall in Japanese industrial output that declined 4 percent in September as compared to a rise of 0.6 percent a month ago. On the MCX, oil prices declined by 1.8 percent and hovering around Rs.4527/bbl till 4:45pm today.
Outlook
As we approach the weekend, global financial markets are expected to witness mixed trade, as on one hand bulls take charge from positive European cues and on the other hand concerns over long-term economic risks still remain. On the back of this, we expect gold prices to trade higher as building inflationary pressures coupled with mixed views over the macroeconomic scenario will support upside in the yellow metal.
Silver is expected to trade on a rangebound note, taking mixed cues from upside in gold and fall in base metal prices.
Copper is expected to witness downside pressure and prices may not be able to sustain around levels of $8000/tonne in the international markets on account of expectations of slowdown in Chinese demand.
Slowdown in Japanese industrial output coupled with mixed sentiments ahead of the weekend trade is expected to lead to downside pressure on crude oil prices today.
Courtesy: Angel Commodities
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