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Apr 27, 2012, 06.23 PM IST | Source: Moneycontrol.com

Base metals, Silver may trade higher: Angel Commodities

Angel Commodities has come out with its report on international commodities. According to the research firm, base metals and silver are expected to trade higher.

Angel Commodities has come out with its report on international commodities. According to the research firm, base metals and silver are expected to trade higher.

  • Italy sells 5.95 billion Euros of government bonds today.
  • Aluminium weekly Shanghai inventories down by 4.6 pct this week.
  • Silver trades higher on a weaker dollar index in today’s trade.
European markets erased its earlier losses and traded on flat note on the back of successful auction of Italian bonds. Italy sold 5.95 billion Euros of government bonds and Italian 10-year bond yields rose to 5.84 percent, after S&P cut Spain’s ratings which increased concerns over Euro Zone debt worries. Asian markets ended in the red and US stock futures are trading on a flat note.

Spot gold prices traded on a flat note till 4.30 pm IST today as downgrading of Spain’s credit rating by Standard & Poor's (S&P) increased concerns over Euro Zone debt worries and physical demand for gold in India was weak after the last vital gold-buying festival of the wedding season. This also acted as a negative factor for the yellow metal prices.

Taking cues from upside in base metals and a weaker dollar index, Spot silver prices gained by 0.3 percent today. The white metal touched an intra-day high of $31.16/oz and was trading at $31.16/oz till 4:30pm IST today. On the MCX, silver May contract decreased by 0.2 percent and hovered around Rs. 55,794/kg after touching an intraday low of Rs. 55,669/kg today till 4:30pm IST.

Revival in the European markets on account of successful Italian bond auction helped the base metals complex to trade higher on the LME today. In addition to this, weakness in the US dollar index also acted as a further supportive factor for the metal prices.

Aluminium was the top performer amongst the base metals pack today, as the metal rose around 0.8 percent on the LME and more than 1 percent on the MCX till 4.30 pm IST. Weekly aluminium inventories at warehouses monitored by the Shanghai Futures Exchange decreased sharply by 4.6 percent to 349,054 tonnes this week and this acted as a positive factor for the metal prices.

Nymex crude oil prices traded lower by 0.3 percent till 4.30 pm IST today on the back of downgrading of Spain which may curb the demand for fuel coupled with ease in Iran’s nuclear sanctions.

However, further decline was cushioned on account of a weaker dollar index. Oil prices touched an intra-day low of $ 103.74/bbl and was hovering around $ 104.24/bbl till 4:30pm IST. On the MCX, crude oil prices declined by 0.2 percent and were trading at Rs. 5491/bbl till 4:30pm IST today.

Outlook
Successful bond auction from Italy led to revival in the European markets which also resulted weakness in the US dollar index today. Taking cues from this, we expect base metals and silver to trade higher. In case of gold, weak demand from India, the world’s largest consumer of gold, may lead to downside in gold prices.

In the evening session we expect crude oil prices to trade on a range bound note as on one hand weakness in dollar index, successful auction of Italian bonds will provide support while easing supply concerns from Iran and expected slowdown in US GDP growth can cap further gains.

US Advance GDP for the first quarter of 2012 is expected to grow at a slower pace and if the data come as expected then this will lead to downside in the markets.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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