Gold traded down to $1379/oz as a result of stronger dollar in earlier sessions. However, the dollar index later retreated amid mixed PMI data from the eurozone which helped the bullion prices catch up to $1383/oz in London. Equities markets were mixed today. Fears that Spain’s credit rating may be downgraded are also hovering in the markets. MCX gold and silver futures also traded lower. We expect prices to remain lower during later sessions also, as housing data are expected to remain positive which will hurt gold’s demand as an alternative asset. However, other data in the form of rising jobless claims and falling Philadelphia Fed index may help the yellow metal recoup from lower levels.
Base Metals
Base metal prices are trading with modest losses on the back of weak equity markets. Aluminum is the only
exception, which is trading modestly in green, supported by declining inventories. Most of the Asian equity markets closed lower and the European markets are also trading lower largely consolidating after the PMI data came in mixed. Reserve Bank of India left interest rate unchanged while to ease liquidity conditions it reduced SLR rate by 1 percent.
In the evening, housing starts and building permits from US are expected to come in higher and thereby base metal prices might visit pull back on the higher side. However current account deficit is expected to widen along with increase in jobless claims. Growth in Philadelphia Fed is also expected to moderate. Overall, positive data is expected to send base metal prices paring some of the losses.
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