Copper Recovering Nicely While Gold Eases

Gold prices are flat this morning as markets return to normal. Gold is trading at 1337.40 and silver added 51 points to trade at 21.273. Gold prices eased on Tuesday as safe haven buying of gold faded after fears of military action by Russia in Ukraine eased. Russian President Putin said he would use force in Ukraine only as a last resort. Major investors moved back to equities after the statement by Russia pushing Gold prices further down. Premiums in China, the top buyer of gold, have fallen to less than $1 an ounce from over $20 in the beginning of the year due to lack of robust demand.

In India gold demand still remains down as import curbs stands still, the Trade Ministry has raised the issue to the Finance Ministry as it has increased the

smuggling and hurt exports. Gold prices are expected to move lower for the day over reduced tensions in Russia and Ukraine and lack of physical demand. Taking cues from fall in gold prices along with fall in iShares Silver Trust Holdings, silver prices slipped around 1.3 percent yesterday. Further, strength in the DX exerted downside pressure on the prices. The US Dollar Index (DX) gained around 0.1 percent yesterday on the back of rise in risk aversion in market sentiments in the earlier part of trade which led to increase in demand for the low yielding currency. However, sharp upside in the currency was capped as a result of ease in geopolitical tensions between Russia and Ukraine, thereby leading to a recovery in market sentiments. The currency touched an intra-day high of 80.22 and closed at 80.18 on Tuesday. The dollar is flat in the Asian session this morning.

Base metals and industrial metals have recovered slightly as stronger economic data has hit the wires lately but was overshadowed by the geopolitical situation. Base metals on the LME traded higher yesterday on the back of receding geopolitical tensions between Russia and Ukraine after the Russian President Putin called back troops from the Ukraine border, thereby easing concerns regarding the demand outlook. Also, rise in risk appetite in the markets acted as a positive factor. Copper this morning has added 9 points and is trading at 3.221 after falling as low as 3.16 earlier in the week. Copper prices jumped by more than 1 percent yesterday taking cues from easing of war concerns between Russia and Ukraine, which was feared to damp demand for the red metal. Further, recovery in market sentiments in the latter part of trade supported gains. However, rise in LME copper inventories by 0.5 percent to 275,200 tonnes along with strength in the DX restricted further gains. The red metal touched an intra-day high of $7068/ton and closed at $7049/ton in yesterday’s trade. Traders can expect base metals prices to trade on a mixed note today on the back of upbeat market sentiments coupled with expectations of positive retail sales data from the Euro Zone which will act as a positive factor. Palladium gained $4.90 this morning to trade at 768.70 while platinum took cues from gold and traded flat at 1463.35