Spot Gold prices traded higher today despite strength as safe-haven buying continues to support the yellow metal. Global economic worries in the form of debt issues in the Euro zone have created concern in the financial markets and investors have become wary over the pace of the recovery.

Gold prices will continue to attract demand even in times of a strengthening dollar as the yellow metal’s demand as a hedge against inflation coupled with safe-haven demand will support higher prices. The US Dollar has touched a high of 82.76 today and will continue to strengthen as Euro zone worries coupled with positive US economic data has boosted the appeal of the currency.

Copper prices slumped 2.6% till 4.30pm IST and the red metal fell to its lowest in more than two months on the back of dollar strength and on fears of further monetary policy in China. Prices on the LME touched a low of $7,208/tonne till 4.30pm IST despite a decline in inventories by 2,325 tonnes today.

Copper prices mainly declined today as a slowdown in Chinese manufacturing in March reiterated concern that demand for base metals may get affected. Chinese purchasing managers index declined to 55.4 from 57 in March, indicating the government attempts have been successful in cooling off the world’s fastest growing economy.

Crude oil prices declined more than 1% till 4.30pm IST on the back of concerns over a decline in manufacturing activity in China. Markets also became concerned over expectations of a rise in crude oil inventories. The energy market still struggles from demand concern as oil inventories continue to gain. Prices also came under pressure due to strength in the dollar which made the commodity look expensive for holders of other currencies.

Outlook

We expect the dollar to strengthen today as positive data boosts hopes of a rise in interest rates and continuing worries in the Euro zone raise demand of the dollar as a safe-haven. This strength in the dollar coupled with a slowdown in manufacturing in China will lead to downside pressure in Copper and Crude Oil prices today.

But Gold prices will continue to trade in the positive territory as factors like inflation worries, uncertainty over the Euro zone front will lead to a rise in safe-haven buying in the yellow metal. The US is expected to announce economic data on pending home sales and factory orders today. Treasury Secretary Geithner will also deliver his speech and markets will take further cues from the latest views over economy.

Courtesy: Angel Commodities

source: http://www.commodityonline.com/futures-trading/technical/Gold-trades-higher-copper-slumps-Oil-falls-15976.html