Gold, crude oil, and copper futures prices touched new highs during the last week ended on Friday following strong global markets. Copper prices continued to find support from the downtrend in LME inventory levels, electricity shortages in Chile, and production problems in China, which underscore perceptions of a tighter supply/demand balance.
The maturing February 2008 copper contract gained ground and traded at Rs 331.50 per kg, up by nearly 5.72% over the previous week. The volume was 23,972 tonne, down from 31,090 tonne, as some players have shifted interest to far month contracts. Open interest was 13,090 tonne, down from 15,452 tonne.
Crude oil prices vaulted to a record over $101 a barrel during last week as the Organization of the Petroleum Exporting Countries (Opec) supply concerns and hedge fund buying countered worries about the US economy. The gains extended a record rally that sent crude to $100.10 on Tuesday, on expectations the Opec will hold output levels steady or even reduce them when it meets next month. Rush of buying by funds seeking a hedge against inflation helped push oil to new highs, with further support coming from supply uncertainty from Opec members Nigeria and Venezuela. The April 2008 crude oil contract was quoted higher 3.12% to trade at Rs 3,896 per barrel. Total volume was higher at 14.04 lakh barrels from 8.02 lakh barrels, while total open interest was up from 9.73 lakh barrels to 11.85 lakh barrels.
On the International front, spot gold is meeting with stiff resistance at $945/964 levels where support is seen at $924 levels. The active April 2008 gold contract was up nearly 4.53% at Rs 12,083 per 10 gram. Total volume was 15,316 kg, up from 9,032 kg over the previous week. Total open interest was higher at 13,359 kg from previous week?s 11,158 kg. Gold prices are likely to see further bullishness backed by a surge in buying interest, as key technical and fundamental levels have been breached. Fundamentally, the weaker dollar and fear of more interest-rate cuts by the US Fed yet to come shall support gold?s allure. In the medium term, five factors will drive gold prices higher-supply and demand, dollar weakness, institutional buying, the price relationship between gold and crude oil, and global economic uncertainty.