Gold saves the day as most commodities plunge

Written by Commodities Bureau | New Delhi, Sep 30 | Updated: Oct 1 2008, 05:34am hrs
Commodity markets in India, barring gold, opened sharply down Tuesday trailing the weakness in other markets as the US Congresss rejection of the $770-billion bailout package that triggered fears of a general economic slowdown as poor liquidity could pull down prices.

Gold, however, rose during the day as investors flocked to the precious yellow metal because of its appeal as a safe-haven investment and at one time, MCX December gold traded at Rs 13,542 per 10 gm, not too far from the highest level recorded at Rs 13,764 on July 15.

At 1900 hours IST, copper November traded at Rs 299.90 per kg, down 1.15% from previous close, while silver December contract was trading at Rs 20,533 per kg, down 2.02% from the previous close. Agricultural commodities also closed down and crude palm oil, which touched a 19-month low on the Bursa Malaysia Derivatives Exchange, closed at Rs 337.40 per 10 kg at the Indian markets, down 0.30% from the previous close.

On Monday, the Reuters/Jefferies CRB Index of 19 raw materials fell the most in at least 50 years after US congressmen voted 228 to 205 against a measure to authorise the biggest government intervention in the markets since the Great Depression. Although prices did recover, some lost ground during the later half of trading on Tuesday in the Asian markets over hopes that a revised draft of the bill might be presented before the US Senate before the weekend, but experts said that the sentiment would continue to be depressed till a clear picture on the bailout came through.

December-delivery gold advanced 1.7% to $910 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 1430 hours in Singapore. Barring gold, prices of most other commodities like base metals and agriculture dropped sharply in the early hours trading in global markets. Copper fell in London, heading for the biggest quarterly decline in more than two decades, on concerns that the worsening financial turmoil will slow global growth and crimp demand for industrial metals.

Among agri-commodities, natural rubber tumbled by its daily trading limit.

on global economic growth concerns after a US financial rescue plan was rejected by lawmakers and as production in Thailand, the biggest exporter, was forecasted to rise.