Weak US data, stronger Dollar may exert downside pressure on Commodities

Weak US data, stronger Dollar may exert downside pressure on Commodities

Spot gold prices are trading lower by 0.1 percent today on the back of rise in risk aversion in the markets coupled with strength in the DX. Also, correction seen in SPDR holdings exerted downside pressure on prices.

February 21, 2014 16:55

MUMBAI: European equities are trading on a mixed note today ahead of new home sales data from the US in the evening session. Asian markets ended on a mixed note and the US stock futures are trading higher.

UK’s Retail Sales slumped by 1.5 percent in January as against a jump of 2.5 percent in December. Public Sector Net Borrowing fell by 6.4 billion Pounds in January as compared to a gain of 9 billion Pounds in the previous month.

Spot gold prices are trading lower by 0.1 percent today on the back of rise in risk aversion in the markets coupled with strength in the DX. Also, correction seen in SPDR holdings exerted downside pressure on prices. In the Indian markets, gold prices traded on a flat note today.

Taking cues from fall in gold prices, Spot silver prices fell by around 0.1 percent today. Also, mixed global market sentiments along with strength in the DX acted as negative factor for prices of the white metal. MCX Silver prices gained around 0.1 percent today despite Rupee appreciation.

Base metals pack on the LME except Copper traded on a positive note on the back of positive manufacturing data from the US that came yesterday. Also, decline in inventories acted as a positive factor. However, sharp gains were capped on the back of strength in the DX along with rise in risk aversion in the markets. In the Indian markets, base metals traded higher except Copper despite Rupee appreciation.

LME Copper prices fell by around 0.2 percent today taking cues from unfavourable Philly Fed manufacturing data from the US along with negative manufacturing data from the biggest consumer, China. Also, strength in the DX along with mixed global market sentiments acted as a negative factor. However, positive manufacturing PMI data from the US coupled with decline in LME inventories by 1.5 percent to 285,350 tonnes restricted sharp fall in prices. MCX Copper prices declined by 0.1 percent today.

Nymex crude oil prices declined by 0.4 percent today taking cues from rise in the US crude oil inventories which has gained for the fifth consecutive week ending on 14th Feb’14. Further, drop in gasoline and distillate demand along with strength in the DX exerted downside pressure on prices. MCX crude oil prices fell by 0.3 percent and touched a low of Rs.6365/bbl till 4:00pm IST.

In the evening session, we expect precious metals, base metals and crude oil prices to trade on a mixed note on the back of mixed global market sentiments. Also, strength in the DX will act as a negative factor.

Further, expectations of weak economic data from the US in the evening session will exert downside pressure on prices