Gold, Silver to trade lower as safe haven demand wanes
Frankfurt (Mar 27) European markets are trading higher today as Mario Draghi assured that his bond-buying plan will meet its monthly target. Asian markets ended mixed and the US stock futures are trading in the red.
Gold prices eased on Friday as traders booked profits after a seven-day rally and as the dollar rebounded on strong U.S. data, but the metal still looked set to post its second straight weekly gain on expectations U.S. interest rates will stay low for longer. Tensions in the Middle East after Saudi Arabia and its allies launched air strikes in Yemen provided some support to gold, typically seen as a safe-haven asset. Spot gold eased 0.5 percent to $1,198 an ounce by 4 PM IST. On the MCX, gold prices are trading lower by 0.76 percent at Rs.26596/10 gms.
Spot silver prices are trading lower by 0.8 percent at $16.96 per ounce. Strengthening dollar and weak base metals pack is acting as a negative factor. On the MCX, silver prices are trading lower by around 0.8 percent at Rs.38316/kg.
Copper prices plunged by 0.7 percent as mines resumed operations after flooding in Chile, the world's largest producer. Also, industrial profits extended declines in China, the biggest consumer, and exerted downside pressure on prices. However, decline of 0.7 percent in LME stocks restricted sharp fall. MCX copper prices are trading lower by 1.2 percent at Rs.387.65/kg owing to Rupee appreciation.
Oil prices fell more than $1 a barrel on Friday as worries receded over the threat of disruptions to Middle East supplies due to Saudi Arabia-led air strikes in Yemen. Oil jumped around 5 percent on Thursday, its biggest daily gain in a month, after air strikes in Yemen by Saudi Arabia and its Gulf Arab allies sparked fears that escalation of the Middle East battle could disrupt world crude supplies. Worries over the possible impact of the geopolitical tensions on the Bab el-Mandeb Strait, the closure of which could affect 3.8 million barrels per day (bpd) of crude and product flows, put oil prices on track for weekly gains. On the MCX, oil prices are trading lower by 2.37% at Rs.3176/bbl.
Gold and silver prices will trade lower as the safe haven appeal of the yellow metal has waned down with uncertainty in Yemen not affecting the crude oil output.
Oil prices will trade lower today on rising US crude inventories coupled with strengthening dollar. Besides, there is no actual impact on crude supplies from Yemen in turn exerting downside pressure on prices.
We expect LME Copper prices to trade lower today as Codelco, the top copper miner, said that its Atacama Desert sites were gradually resuming operations after shutting down earlier. Also, investors will be cautious ahead of US GDP data in the evening session.