All the major futures contracts of bullion, base metals, and energy products on the MCX platform reacted sharply from the previous levels following the weakness in crude oil prices, while crude oil contracts suffered a sharp setback. Gold tends to move in line with crude oil prices, as it boosts bullion’s appeal as a hedge against inflation. But the metal remained vulnerable, as it followed volatile crude prices. The decline extends crude oil’s retreat from last week’s record above $135 a barrel, amid growing signs that global energy demand growth is slowing under the strain of high costs, economic turmoil in the US.
Crude futures have shown some reluctance to hold on to the gains. That may prove to be bearish as demand continues to slacken, particularly in the US and the industrialised nations. Refinery use continues to be relatively weak, which is indicative of poor demand, especially for gasoline.
The active silver July contract was traded lower at Rs 23,373 per kg, down by 7% or Rs 1,701 over the previous week. The open interest was 156 tonne and volume was 425 tonne. Silver prices are expected to follow trend in gold prices in near term. India’s demand for gold is also expected to remain sluggish due to high prices and end of festive season.
The active June gold contract was 5% lower at Rs 12,128 per 10 gram, down by Rs 416 per 10 gram over previous week. Total volume was 13,791 kg. Open interest was 4,548 kg. “If we keep on getting positive economic data from the US in the near term, then we may see further strengthening of the dollar and that will weigh on bullion prices,” an analyst with Angel Broking said.
The June crude oil contracts fell sharply from the peak level and finally settled at Rs 5,368 per barrel, down by 5.45% or Rs 309 over previous week. Total volume was 27.01 lakh barrels, while open interest was 13.62 lakh barrels. Crude futures have shown some reluctance to hold on to the gains. Long-term tight demand supply fundamentals certainly indicate higher oil prices for coming days. The active copper June contract was traded lower at Rs 337.45 per kg, down by Rs 8.90 over the previous week. The open interest was 14,575 tonne and volume was 9,114 tonne. Copper prices are expected to remain volatile in the next few trades until there is some news on the supply crunch from major manufacturers. Copper prices could trade in the range of $7,700 to $8,200 range in the coming weeks.