Precious, base metals, Crude Oil may trade positive on favourable US data cues

MUMBAI-INDIA (July 19)  European equities are trading higher today on the back of favourable economic data from the region coupled with forecast for positive economic data from US in evening session. Asian markets ended on a mixed note and US stock futures are trading on a flat note.

European Current Account was at a surplus of 19.6 billion Euros in May as against a previous surplus of 23.8 billion Euros a month ago. UK’s Retail Sales rose at slow pace of 0.2 percent in June from earlier rise of 2.1 percent in May.

Spot gold prices increased around 0.5 percent today on the back of upbeat global market sentiments. However, sharp upside in prices was capped on account of decline in SPDR gold holdings coupled with strength in the US Dollar Index (DX).

In the Indian markets, depreciation in the Rupee supported an upside in prices on the MCX. Taking cues from rise in gold prices, Spot silver prices increased around 1 percent today. However, downside in base metals group along with strength in the DX. Depreciation in the Indian Rupee acted as a positive factor for prices on the MCX.

The base metals complex declined in today’s trade on the back of statement from International Monetary Fund (IMF) that Chinese economic growth will miss its estimates. Further, strength in the DX coupled with mixed LME inventories exerted downside pressure in prices. On the domestic bourses, depreciation in the Rupee cushioned sharp fall in prices on the MCX.

Copper, the leader of the base metals pack declined around 0.1 percent today on the back of forecast that Chinese economy will not grow as expected by the IMF. Further, strength in the DX exerted downside pressure on prices. However, sharp downside in prices was prevented on account of decline in LME copper inventories by 0.1 percent which stood at 640,600 tonnes coupled with upbeat global markets. Depreciation in the Indian Rupee supported an upside in prices on the MCX.

Nymex crude oil prices declined around 0.2 percent today taking cues from strength in the DX coupled with expectations that Chinese economic growth will miss its estimates. However, sharp downside in prices was cushioned on the back of decline in API and US crude oil inventories. On the domestic bourses, depreciation in the Rupee supported an upside in prices on the MCX.

In the evening session, we expect precious metals, base metals and crude oil prices to trade higher on the back of expectation of favourable economic data from the US. Further, movement in the DX will be determined by the statement from US Federal Reserve Chairman Ben Bernanke and any ease in concerns regarding the pullback in stimulus measures will add downside pressure on DX and support upside in dollar denominated commodities.

However, sharp upside in base metals prices will be capped or reversal can be seen on account of forecast for decline in US manufacturing data.