Friday morning base metals are trading down by 0.2 to 1.1 percent at LME electronic platform. The Asian equities were a tad weaker early morning, but were poised for their biggest weekly gains since January as strong US corporate earnings lifted the S & P index to two-month high. Japan’s copper shipments increased by a percent while the Chinese bourses are also optimistic on the back of increased speculation of easing over the weekend as the Premier Wen Jibao confirmed, ìBeijing needs to step up efforts to create more jobs. Weak Asians coupled with improving demand for base metals may continue to have a subdued impact as one may negate the other in today’s session.
From Europe, German Chancellor Angela Merkel easily won a parliamentary vote on a Euro-zone rescue package for Spanish banks yesterday despite growing unease in her centre-right coalition about the rising cost of Europe’s debt crisis for German taxpayers. The shared currency Euro is also slightly down, undermined by worries about Spain’s fiscal woes and recent falls in shorter-term Euro-zone interest rates. However, the German producer prices may continue to cool and may likely keep the metals pack at a blend. Further, there are no major releases from US and being the last day of the week, base metals might remain subdued for the session.
Overall we expect a range bound session and expect limited upside on the back of hopes of increased easing.
Gold futures prices are yet to break the levels we are mentioning repeatedly for which a sturdy catalyst is needed. Probably, market is waiting for the Fed meet at July end. This morning gold is again seemed to change a little from its prior closing. Asian equities slipped while the euro turned lower despite Germany approved Spain’s banking sector bail out. Moving ahead it is quite clueless today as the session is neither having any major economic releases from the western globe nor any news is expected from central banks. Gold is therefore expected to hold the range of $1560-1590 once again.
From the Europe, Spain is again pushing for a 12 billion euro aid needed for debt redemption. This may not hamper their borrowing plan, as explained by their economy minister, but the swelling debt and dishearten bond auction has left no other way to reduce its borrowing cost. Debt is bound to swell and so, the euro may remain under pressure. This may keep the metal under stress. COMEX volumes have actually fallen for last two sessions while the open interest has also declined. This would indicate a price fall followed by a rise yesterday was clueless as investors were confused whether to carry forward position or not. Gold is expected to hold the range and we will be intimating the opportunities as and when arrive.
