 "Metals down with US Federal Reserve ending QE")
Metals traded lower on Thursday due to the US Federal Reserve’s decision to end its quantitative easing (QE) programme, on indications of economic recovery, and to defer an increase in interest rates for a considerable period.
Copper led the base metals’ segment and settled with a decline of around 1.5 per cent on the benchmark London Metal Exchange (LME). Other base metals, including aluminium and zinc, also moved down. Gold slid towards $1,200 an oz in London to trade at a 14-week low, marginally above this benchmark level of the cost of production. Silver followed and slipped below the psychological barrier of $17 an oz, to trade at $16.68 an oz in the London physical market.
Copper's price had traded lower owing to strength in the dollar after the Fed continued with QE tapering. However, supply disruption concerns from significant global producers restricted a sharp negative movement. On the Multi Commodity Exchange (MCX) in India, copper's price slid 0.8 per cent to Rs 418.30 a kg in early evening trade.
“We expect copper prices to trade sideways, as supply concerns continue to mount after global miner Southern Copper on Wednesday revised down its forecast for output next year by 9.8 per cent, after supply concerns from Peru and Indonesia. On the other hand, expectations of weak advance GDP data from the US in the evening session will be a drag on prices. We expect gold prices to trade lower, owing to strength in the dollar index,” said Prathamesh Mallya, senior analyst, Angel Commodities Broking.
Spot gold prices are trading lower, to near a three-week low on Thursday — the US Fed's decision has hurt bullion's safe-haven appeal. Also, a declining trend in SPDR holdings (it is the world's largest bullion-backed exchange-traded fund) acted as a negative factor for prices. On the MCX, gold prices plunged by 1.1 per cent and trading at Rs 26,755 per 10g for near month delivery.
Spot silver prices also turned lower taking cues from weakness in gold prices. On the MCX, silver prices are trading lower by two per cent at Rs 37,500 a kg. Also, WTI oil prices declined by 0.8 per cent after production reported a rise to the highest in a little over three decades. EIA figures showed US crude oil stockpiles gained for a fourth week as production increased to 8.97 million barrels a day, the most since January 1983. On the MCX, crude oil prices are trading lower by around 1.2 per cent at Rs 5,024 a barrel.
"There was a broad based sell off witnessed in precious and industrial metals as dollar Index ticked higher to a three week high after Fed ended bond buying program under its third round of quantitative easing. Fed expressed an optimistic view of the US economic recovery , even though there are widespread concerns about global economic growth.Fed has also maintained that interest rates are likely to remain low for a considerable period and also expressed an upbeat outlook about jobs growth," said Sugandha Sachdeva of Religare Securities.
She added that along with this, Fed’s acknowledgement about improvement in labor market is being construed by market participants as an indication that it would hike interest rates soon. This led to strength in dollar and worsened the appeal of commodities as an alternative investment. Along with this, a weak global trend , led to prices drifting lower in the session.
Gold prices gravitating around the psychological $1,200 per ounce mark , are likely to witness strong support around $1,180 per ounce at COMEX, a level which has been protecting prices since last year and silver is likely to be underpinned by $16 per ounce mark, she said.
Copper led the base metals’ segment and settled with a decline of around 1.5 per cent on the benchmark London Metal Exchange (LME). Other base metals, including aluminium and zinc, also moved down. Gold slid towards $1,200 an oz in London to trade at a 14-week low, marginally above this benchmark level of the cost of production. Silver followed and slipped below the psychological barrier of $17 an oz, to trade at $16.68 an oz in the London physical market.
Copper's price had traded lower owing to strength in the dollar after the Fed continued with QE tapering. However, supply disruption concerns from significant global producers restricted a sharp negative movement. On the Multi Commodity Exchange (MCX) in India, copper's price slid 0.8 per cent to Rs 418.30 a kg in early evening trade.
“We expect copper prices to trade sideways, as supply concerns continue to mount after global miner Southern Copper on Wednesday revised down its forecast for output next year by 9.8 per cent, after supply concerns from Peru and Indonesia. On the other hand, expectations of weak advance GDP data from the US in the evening session will be a drag on prices. We expect gold prices to trade lower, owing to strength in the dollar index,” said Prathamesh Mallya, senior analyst, Angel Commodities Broking.
Spot gold prices are trading lower, to near a three-week low on Thursday — the US Fed's decision has hurt bullion's safe-haven appeal. Also, a declining trend in SPDR holdings (it is the world's largest bullion-backed exchange-traded fund) acted as a negative factor for prices. On the MCX, gold prices plunged by 1.1 per cent and trading at Rs 26,755 per 10g for near month delivery.
Spot silver prices also turned lower taking cues from weakness in gold prices. On the MCX, silver prices are trading lower by two per cent at Rs 37,500 a kg. Also, WTI oil prices declined by 0.8 per cent after production reported a rise to the highest in a little over three decades. EIA figures showed US crude oil stockpiles gained for a fourth week as production increased to 8.97 million barrels a day, the most since January 1983. On the MCX, crude oil prices are trading lower by around 1.2 per cent at Rs 5,024 a barrel.
"There was a broad based sell off witnessed in precious and industrial metals as dollar Index ticked higher to a three week high after Fed ended bond buying program under its third round of quantitative easing. Fed expressed an optimistic view of the US economic recovery , even though there are widespread concerns about global economic growth.Fed has also maintained that interest rates are likely to remain low for a considerable period and also expressed an upbeat outlook about jobs growth," said Sugandha Sachdeva of Religare Securities.
She added that along with this, Fed’s acknowledgement about improvement in labor market is being construed by market participants as an indication that it would hike interest rates soon. This led to strength in dollar and worsened the appeal of commodities as an alternative investment. Along with this, a weak global trend , led to prices drifting lower in the session.
Gold prices gravitating around the psychological $1,200 per ounce mark , are likely to witness strong support around $1,180 per ounce at COMEX, a level which has been protecting prices since last year and silver is likely to be underpinned by $16 per ounce mark, she said.