Copper Slips Below $8000, Precious Metals Decline

Although optimism over solution by policymakers towards the European debt crisis helped markets last week, current sentiments in the global financial markets look mixed. Japan’s move to halt appreciation in the currency, concerns over the Chinese property market and long-term risks with respect to the European economy remaining intact, have led to re-emergence of risk aversion today.

Bears dominated trading session in Asian and European equity markets today and this negativity spread to the US markets as stock futures are trading in the negative territory. Unemployment rate in the Euro Zone jumped to 10.2 percent in September, thereby threatening a further slowdown in the 17-nation Euro region.

In this week, there are a host of economic indicators and interest rate decisions by major global central bankers. Global markets will watch out for developments on the monetary policy front and any negative news or development could lead to negative sentiments during the week.

The US Dollar Index (DX) strengthened more than 1 percent today as risk aversion gripped global financial markets, thus leading to increased demand for the low-yielding currency. A stronger dollar makes dollar-denominated commodities look less attractive for holders of other currencies.

Spot Gold prices declined more than 1 percent till 4.45pm IST as a stronger dollar added pressure on prices. Poor risk sentiments on account of uncertainty towards the European debt crisis could not revive demand for the yellow metal as a safe-haven.

Silver witnessed downside pressure more than that of gold as apart from being a precious metal it is also an industrial metal. A deteriorating global economic scenario threatens demand for silver.

Taking cues from these concerns coupled with dollar strength, Spot Silver slipped almost 3 percent till 4.45pm IST.

Copper, the leader of the base metals pack slipped below its crucial $8000/tonne mark today, falling 2.5 percent till 4.45pm IST.

Macroeconomic worries have led to demand concerns for the red metal amid a decline in Chinese demand.

Nymex crude oil prices declined by 0.7 percent till 4:45pm IST and is trading around $92/bbl, taking cues from expectations of weakening demand coupled with a stronger dollar. On the MCX, oil prices declined by 0.3 percent and are hovering around Rs.4519/bbl till 4:45pm today.

Outlook

Gold prices are expected to trade with a negative bias today as we expect the dollar to strengthen further on account of weak global market sentiments, thus leading to downside pressure on dollar-denominated gold prices.

Silver is also expected to witness downside pressure on account of re-emergence of risk aversion on account of global economic concerns.

We expect crude oil to trade on a negative note today on account of weak market sentiments coupled with dollar strength. Base metals are expected to trade with a negative bias today on the back of risk aversion in the markets along with dollar strength.