Weak market sentiments, stronger Dollar may keep Commodities negative

Mumbai-India (Jan 31)   European equities are trading on a negative note today on the back of unfavourable economic data from the region. Asian markets ended on a mixed note and US stock futures are trading in the red.

India’s Fiscal deficit rose to Rs.5163.9 billion in December from Rs.5095.5 billion in November.

German Retail Sales slumped by 2.5 percent in December as compared to a gain of 0.2 percent in November. French Consumer Spending fell by 0.1 percent in December as against a gain of 1.4 percent in November. Euro Zone’s CPI Flash Estimate rose by 0.7 percent in January as against a gain of 0.8 percent in December. Euro Zone’s Unemployment Rate remained unchanged at 12 percent in December.

Spot gold prices are trading higher by 0.2 percent today on the back of rising trend in SPDR gold holdings. However, weak global market sentiments coupled with strength in the DX capped sharp upside movement in the prices. In the Indian markets, gold prices rose around 0.4 percent owing to Rupee depreciation.

Taking cues from gain in gold prices, Spot silver prices gained around 0.3 percent today but strength in the DX along with risk aversion in the markets capped sharp gains in the prices. MCX Silver prices jumped around 0.8 percent on Rupee depreciation and touched a high of Rs.43575/kg till 4:00pm IST.

Base metals pack on the LME traded on a negative note on the back of decline in pending home sales data from the US that came yesterday. Further, unfavourable economic data from Euro Zone along with weak market sentiments after QE tapering by the Federal Reserve and strength in the DX acted as negative factor. However, decline in inventories cushioned sharp fall in the prices. In the Indian markets, base metals traded higher apart from Copper on Rupee depreciation.

LME Copper prices fell around 0.6 percent on the back of drop in pending homes sales in the US coupled with strength in the DX. Further, negative economic data from Euro Zone along with weak market sentiments as a result of QE tapering by the Fed acted as a negative factor. However, decline in inventories by 0.5 percent cushioned sharp negative movement. In the Indian markets, prices fell by around 0.1 percent but Rupee depreciation prevented sharp fall.

Nymex crude oil prices declined around 0.5 percent on the back of strength in the DX and estimates of decline in demand for the fuel after QE tapering by the US Federal Reserve. Further, decline in German retail sales data exerted downside pressure on the prices. In the Indian markets, prices gained by 0.2 percent due to depreciation in the Rupee.

Precious metals, Base metals and Crude oil prices are expected to trade on a negative note today as a result of weak market sentiments after QE tapering of $10 billion by the Federal Reserve. Further, strength in the DX will act as a negative factor.

However, expectations of favourable economic data from the US in the evening session will cushion sharp downside in the prices.