Silver Falls, Nymex Crude Gains Slightly

In the initial part of today’s session, European stocks traded lower but have now trimmed losses after European Commission President Jose Barroso stated that there is a possibility of positive outcome at the European Union Summit in Brussels on 23rd October.

This increased expectation that European leaders may reach an agreement to increase the rescue fund in order to control debt crisis.

India’s food inflation accelerates to the highest level in six months to 10.6 percent for the week ending 8th October, as costs of vegetables, potatoes, fruits, milk, eggs, meat and fish increased, according to data by the Ministry of Commerce and Industry. Food inflation stood at 9.32 percent in the previous week.

Spot gold prices declined almost 2 percent today, but due to a weaker dollar, it recovered from its low of $1608/oz to trade at $1625/oz till 4.45 pm IST. On the MCX, Gold December contract declined around 0.5 percent as further fall was resisted on account of Rupee depreciation and touched an intra-day low of Rs26,103/10 gms till 4.45 IST today.

Silver prices dropped around 2 percent today till 4.45 pm IST, on the back of fall in gold prices along with downside in base metals. The white metal touched an intra-day low of $30.41/oz and was trading at the level of $30.61/oz till 4.45 pm IST. On the MCX, Silver December contract traded lower by almost 1 percent and was hovering around Rs51,755/kg till 4.45 pm IST.

Fears with respect to the economic slowdown in the Euro Zone and US led to expectation of slower demand growth for metals; this factor exerted downside pressure on base metals complex today.

Zinc was the top loser of the day, as the metal declined more than 2.5 percent on the LME and around1.6 percent on the MCX till 4:45pm IST today. Depreciation in the Indian Rupee resisted to further decline on the domestic bourses.

Nymex crude oil gained around 0.7 percent till 4:45pm IST today, on speculation that European leaders may reach an agreement to boost the rescue fund to tackle with the region’s debt situation coupled with a weaker dollar. Oil touched an intra-day high of $86.94 and was trading at $86.70/bbl till 4:45pm IST. On the MCX, crude oil prices slipped more than 1 percent and was hovering around Rs4309/bbl till 4:45pm IST today.

Outlook

Gold is expected to trade lower today, as easing concerns over Euro Zone debt worries will reduce demand for the yellow metal. But, a weaker dollar may help cushion sharp fall in prices.

Base metals are expected to trade higher today on the back of a weaker dollar coupled with expectation of positive outcome at the European Summit. But prices will remain susceptible to downside pressure in case of any negative news or development with respect to the European economy.

Crude oil is expected to trade higher today on account of a weaker dollar coupled with rising expectations that European leaders will be able to control the debt situation.