Reports of Gaddafi agreeing to African Union’s proposed ceasefire plan lead to investor selling.
The commodity markets experienced all-round selling globally as well as in India on Monday on reports of the African Union’s proposed ceasefire plan having been agreed to by Libyan leader Muammar Gaddafi.
The metals segment saw huge selling in the afternoon session on Monday. Most metals and precious metals were up in the morning but soon after the news of cease fire, they declined.
Copper prices, which saw high level of $9,944 a tonne in the morning trade fell to $9,813 a tonne by afternoon. Similarly, aluminium fell to $2,685 a tonne from $2,720, nickel fell from $27,950 to $27,500 while lead lost $46 from morning high of $2,940. A similar trend was observed in domestic commodity exchanges where all metals’ prices fell by one-two per cent.
“All commodities led by crude oil were up since Libya crisis, but saw profit booking today on peace plans,” said T Gnanasekar, director, Commtrendz, a risk advisory firm. Brent crude oil prices fell from $127 a barrel to $125.36.
“After an impressive run late last week, we could see some profit booking around highs amid peace talks in Libya,” said Ajay Kedia of Kedia Commodities.
More From This Section
However, the fall in crude oil prices may not last long. A Barclays analyst said, “Some of Libya’s oil fields suffered severe damage and Chinese oil imports are also up which gives no reason to be optimistic about oil prices.”
There is another issue which could affect commodities. “There is a squabbling between Democrats and Republicans over the US Budget. There are threats the US government could shut down next week if an agreement between the two parties is not reached. The US government is expected to clarify this issues tonight,” Kedia added. “Going ahead, metals could remain volatile with upward bias as summer holidays and planned plant shut downs in second quarter could reduce supplies,” said Biren Vakil, director, Paradigm Commodities.
In domestic commodity exchange on MCX, most metals saw profit booking. Last week, metals were up nearly five per cent, but lost one per cent on Monday. The dollar index which was at 74.89 in morning, rose to 75.05 resulting in rupee falling 0.8 per cent to 44.39 against dollar which halted the fall as in rupee terms metals became costlier.
SILVER, GOLD AT RECORD HIGHS
PTI adds: Silver continued its sixth session runaway rally to create another record peak at the bullion market here on Monday on sustained speculative buildup on the back of surging international prices. Gold traded a tad lower from its Saturday’s record level owing to subdued buying interest by investors and jewellers at existing levels.
In overseas, the precious metals maintained its record breaking spree on sliding US dollar. Rising inflationary threat due to climbing crude took the investors back to safe heaven buying.
Silver ready (.999 fineness) zoomed by Rs 555 a kg to close at Rs 62,560 from last Saturday’s closing level of Rs 62,005. However, standard gold (99.5 purity) eased by Rs 10 per 10 gm to settle at Rs 21,215 from Rs 21,225 previously.
Reuters adds: Gold hit record highs and silver a 31-year peak on Monday, lifted by elevated oil prices and a weaker dollar, amid expectations the Federal Reserve will lag other central banks in tightening monetary policy.
Precious metals have already been boosted this year by safe-haven demand after unrest swept the West Asia and North Africa and concerns resurfaced over the debt levels of some smaller euro zone economies, most notably Portugal. Spot gold rose as high as $1,476.21 an ounce and was bid at $1,473.10 an ounce, against $1,472.70 late in New York on Friday. Silver hit its highest since early 1980 at $41.93 and was later at $41.36 an ounce against $40.85.