MCX- COmmodity Updates

Precious Metals

Gold futures spiked to $1362/oz during European hours as the dollar index reversed to losses from morning gains on speculation that monetary easing steps will be taken by more countries like U.S. and UK which will erode currency value. Other precious metals; palladium rose to nine year high and silver made fresh 30-year high levels. MCX gold and silver futures also rose on account of firm global cues. KCTL expects gold to sustain its gains with momentary jerks expected ahead of jobless reports. Reports may show a marginal increase in initial jobless claims while a decline in continuing claims and thus, giving a mixed view. However, yesterday’s report showed a decline in private sector jobs which may have some negative impacts on today’s jobless claims reports. Likely declines in the dollar index will keep bullion prices supported. However, actual data will further define the trend.

Base Metals

Base metal prices are trading higher on the back of better than expected industrial production data from Europe and lower dollar index. Most of the Asian equity markets ended mixed, largely consolidating. Industrial production data from both UK and Germany came in better than expected, thereby boosting optimism. BoE

held its policy rate steady, which was largely expected. The size of the asset purchasing program was also left unchanged. LME inventory witnessed decline in stocks for all the base metals, thereby supporting prices to trade even higher.

In the evening, initial jobless claims from US are expected to rise, thereby indicating continuing difficult job market. This along with re-opening of Chinese market tomorrow might send a small bout of profit booking in the late hours, but overall given the lower dollar index, we expect prices to remain higher.

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