Industrial Metals Diverge From Precious Metals

US markets fluctuated over the course of the trading day on Friday before ending the session mostly lower. A mixed batch of earnings and economic news contributed to a lackluster performance by the markets for much of the session. US markets were shuttered on Monday for a local holiday leaving volumes light and there was a lack of global economic data. The European markets fell slightly on Monday as investors paused for breath after a two-week rally amid some mixed data out of China and disappointing results from German lender Deutsche Bank.

  

 

Precious metals steadied on Monday after touching its highest level in nearly six weeks, with a lower dollar and a dip in equities improving investor confidence in the metal. The climb in gold was supported by a jump in physical purchases after data showed that US mint gold coins sold at record rates.  Gold prices trading on a flat note and gained marginally due to rise in gold ETF’s which is managed under SPDR Gold Holdings Trust. Gold holdings saw a sudden jump of 7.5 tons or 1 percent on Friday and stood at 797.05 tons. Further, upbeat market sentiments coupled with weakness in the DX supported an upside in the prices. However, sharp upside in the prices was restricted as less volatility was observed as US banks were closed yesterday on eve of Martin Luther King Day. Gold is trading at 1252.10 up by only 20 cents this morning. Gold remains in the upper level of its recent trading range. Silver tumbled diverging from gold to give up 86 points to trade at 20.218 as industrial metals weighed down the commodity. 

 

Base metals on the LME traded on a mixed note yesterday on the back of unfavorable economic data from China. However, decline in inventories of all base metals except Nickel coupled with upbeat global market sentiments cushioned sharp downside. Also, drop in China’s money market rates to the lowest level in four weeks, boosted demand for the metals.  Copper is trading at 3.341 flat this morning. Copper traded lower by 0.1 percent yesterday taking cues from unfavorable economic data from the World’s biggest consumer. However, the People Bank of China expanded money supply to meet demand ahead of the Lunar year holiday prevented 

Concerns of further QE taper to be announced in the Federal Reserve meeting on 28th-19th January coupled with growth worries in China will cap sharp gains or even reversal in the prices. Also, estimates of unfavorable industrial data from the UK coupled with strength in the DX will act as negative factors. sharp downside movement. Also, upbeat global market sentiments acted as a positive factor.