Gold likely to trade lower on strong dollar, SPDR outflow

Mumbai-India (Mar 9)  European markets are trading lower as concern resurfaced over Greece and the timing of an interest-rate increase in the U.S. Asian markets is trading lower and the US stock futures are trading in the red.

Gold prices are trading higher today, but remained near a three month low as the dollar is trading an 11-year high after a strong U.S. jobs report boosted expectations the Federal Reserve would soon hike interest rates. Spot gold rose to $1,173 an ounce by 4 PM IST, retaining most Friday's near 3 percent drop. U.S. non-farm payrolls increased 295,000 last month after rising 239,000 in January. On the MCX, gold prices are trading marginally higher by 0.3 percent and currently trading at Rs.26095/10 gms.

Spot silver prices are trading higher by half a percent at $15.93/oz. Weakness in the dollar index coupled with strength in the base metals pack will exert downside pressure. On the MCX, silver prices is trading higher by 0.44 percent at Rs.36130/kg.

LME copper prices rose by 0.7 percent to $5773/tonne on the back of weakness of the US dollar. However, continuing growth in stockpiles with LME stocks gaining by 1 percent restricted sharp upside in prices. MCX copper prices are trading higher at Rs.367.20/kg.

Crude oil prices are trading lower in the international markets with WTI and Brent losing its value by 0.32 and 1.12 percent respectively. Oil inventories are rising across the world as production outstrips demand, offsetting geopolitical tensions in the Middle East and the risk of output cuts in Libya and Iraq. Oil producers in the Organization of the Petroleum Exporting Countries (OPEC) have opted not to curb output, despite oversupply in many parts of the world, choosing to defend market share rather than try to support oil prices. On the MCX, oil prices are trading lower by 0.83 percent at Rs.3112/bbl.

Outflows from the SPDR gold trust indicates reduced investment demand, dollar trading at 11 year peak will also act as a negative factor in today’s session.

We expect oil prices to trade lower as markets remain oversupplied with crude inventories rising in the US. Strengthening dollar will also act as a negative factor for prices.

We expect LME Copper prices to trade lower as the US jobless rate fell to a more than six-and-a-half-year low, which could encourage the Federal Reserve to consider raising interest rates in June. Also, top officials in China highlighted the growth and debt challenges the country faces in 2015.

Source: CommodityOnLine