Gold likely to trade down on weak investment demand, strong dollar
Mumbai-India (Apr 13) European markets are trading higher today after a surprise drop in Chinese exports fuelled speculation of more stimulus. Asian markets ended higher and the US stock futures are trading in the red.
Gold dropped for a fourth session in five on Monday as the dollar firmed, backed by expectations the Federal Reserve may be on course to raise U.S. interest rates soon. Fed official Jeffrey Lacker on Friday repeated his call for the U.S. central bank to consider hiking interest rates in June, and said there was no shame in adjusting them lower again if economic data demanded it. Spot gold was off 0.7 percent at $1,198 an ounce by 4PM IST. On the MCX, gold prices are trading lower by 0.50 percent at Rs.26675/10 gms.
Spot silver prices are trading lower by around 1 percent today while MCX silver prices are trading lower by 0.43 percent trading at Rs.36556/kg. Weakness in gold prices coupled with strength in dollar index is acting as a negative factor.
LME Copper prices rose by 0.1 percent as weak trade data from China after subdued inflation data raised hopes of stimulus from the biggest consumer. Also, concerns over supply disruption supported gains. However, strength in the DX along with gain of 0.6 percent in LME stocks restricted sharp gains. MCX copper prices gained by 0.3 percent at Rs.378.25/kg owing to Rupee depreciation.
Brent rose towards $59 a barrel on Monday in a volatile market, continuing gains after a strong end to last week as financial traders increased bets on higher prices amid a slowdown in U.S. drilling. Speculators in U.S. crude futures and options raised net long positions by 52 million barrels in the week to April 7, their biggest weekly rise since 2011, data from the U.S. Commodity Futures Trading Commission showed. On the MCX, oil prices are trading higher by 2 percent at Rs.3284/bbl.
Weak investment demand, strengthening dollar, spot gold trading below the key $1200 mark are all possible factors for prices to come down in today’s trading session.
Oil prices are trading higher today as many in the markets realize that lower oil prices are not going to stay for long. However, rising crude inventories, and stronger dollar will also exert downside pressure on prices.
We expect LME Copper prices to trade sideways today as China's exports surprisingly tumbled in March and increased hopes of further stimulus. Also, persistent supply concerns from world’s biggest producers will anchor prices. However, strength in the DX will act as a negative factor.