Crude oil dips 13%, gold crosses Rs 12,000-mark

Written by Commodities Bureau | Mumbai, Nov 23 | Updated: Nov 24 2008, 05:41am hrs
Except gold futures, crude oil and base metals futures markets continued their slide in the last week ended on Friday, mainly on weak economic activities, amid a firm dollar. Crude oil prices in the international markets traded below $50 a barrel mark, as prices followed movements in the equity markets amidst a rising inventory and a firm dollar. The overall trend in base metals remained down as the global economic situation is weak and the recessionary impact is felt across the globe.

On the other hand, gold futures befitted from a slump in equity markets as safe heaven buying from investors continued to support yellow metal prices.

The MCX Gold December contracts gained some further ground and rose 4.9% to settle at Rs 12,212 per 10 gram over the previous week. Gold prices traded above the key support level of $720 an ounce. Weak macroeconomic data from the US and recessionary situations in major economies helped gold to maintain its flight to safety status. "Lower crude oil prices can exert pressure on gold prices. I think gold prices have a crucial resistance at $780 an ounce," a trader said. However, silver December contracts ended steady at Rs 16,090 per 10 gram, down by Rs 260 per kg over previous week.

"Despite strength in the dollar, gold is trading on a positive note. If this robustness continues and physical demand from gold ETFs stays strong, then we are likely to see a further upside in gold prices," an analyst with Angel Broking said.

The MCX crude oil December contracts prices dipped by 13% to trade at Rs 2,563 per barrel on Friday over the previous week.

With no end in sight for the global economic turmoil, traders continue to focus on the lack of demand. It has been observed that prices tend to become very volatile towards expiration of the near month futures contract on NYMEX. Concern over the weakened international economic outlook still weighs on financial markets. The major trend in oil prices is still bearish, said an industry expert.

The MCX Copper November contracts were lower by Rs 22.80 or 6% to settle at Rs 187.50 per kg over the previous week. In the last two months, the base metals pack has witnessed sharp declines. Production cutbacks by miners, coupled with an expected pick-up in physical buying from China, could help the complete base metals pack to revive, sources said.