Overseas profit-booking at current high levels pulled prices of most metals, precious and base and thus, also led domestic prices to soften. |
Strengthening of currencies, led by euro and yen against the US dollar led retail investors of yellow metal to book profit, which was highly overbought following a 20 per cent rally in the last one month, traders said. |
The weakening of the dollar against other currencies came in as the market players awaited the Federal Reserve meeting later today. "Market is awaiting for a signal marking an end to the regular raising of US interest rates. |
There have have been 15 consecutive raises now and the interest rate is currently at 4 per cent," said a Mumbai-based trader. |
Market players expect the outcome of Fed meet to also signal towards the further movement of gold. "It will depend how gold moves from now on. |
Will it continue the rally to $550 an ounce or will it move downwards to about $490?," said a Hyderabad-based analyst. |
At 1900 IST, overseas spot gold traded at $522 an ounce after seeing an intra-day movement between $521.20 and 526 in Asian trading. Earlier on Monday, it touched a high of $ 540.90 an ounce, the highest since March 1981. |
MCX February contract traded at Rs 7,973 per 10 grams with an open interest of 9,81,800 tonnes down from previous close of Rs 7,971 (at an open interest of 10,079,000 tonnes). |
On Tuesday's pre-market trading on the London Metal Exchange, most overbought metals saw price corrections. |
"Copper, followed by aluminium and zinc have seen good rally over the past month or so and thus, a correction was required even if the upward momentum needs to sustain. Also, the weakening of dollar has supported the fall," said a Mumbai-based base metals trader. |
Market players expect most metals to remain choppy as the year-end approaches and funds then are most likely to square off their positions. |
In early trading, spot copper traded at a $4,348 a tonne, down from Monday close $4,374. The metal had hit a new record high of $4,478 a tonne Friday following fall in LME stocks. Market however, expect prices to move upwards again to cross $4,430 level. |
Aluminium too followed the copper trend and in early LME trade fell below $2,200 a tonne level on Tuesdy. The spot price of Aluminium on the LME had hit a high of $2,289 on Monday. Zinc traded at $1,790 from the previous close of $1,863 and lead was at $1,092, after having hit a high of $1,125 on Monday. |