outlook

Gold remained nervous as investors ditched the dollar and moved to commodities and stocks, relieved that election would end the uncertainty of the long U.S. presidential campaign. Gold futures supported as the dollar endured its biggest one-day drop against a basket of currencies in 13 years. A recovery of oil prices due to an output cut by Saudi Arabia, a more optimistic equity outlook and easier credit cited. Bullion also supported by signs that a global recession seemed averted for the moment. U.S. stocks were 3% higher in afternoon trade. Active buying during the Europe sessions and lower Libor rates helped boost gold buying.

Crude tumbled more than $5 after a government inventory report showed gasoline supplies rose unexpectedly last week, even as crude supplies were flat and distillate supplies rose. Crude oil prices have been under pressure due to sliding demand and concern a slow economy will further curb petroleum use. Crude inventories were flat after five consecutive reports of builds, while gasoline stockpiles surged unexpectedly, according to government data. For the week crude-oil inventories remained at 311.9 million barrels, which is 1.5% above year-ago levels, according to the Energy Department's Energy Information Administration in its weekly report. Analysts had expected a boost of 500,000 barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Gasoline inventories surged by 1.1 million barrels, or 0.6%, to 196.1 million barrels, which is 1.3% below year-ago levels. However analysts expected stockpiles of the motor fuel to fall by 1.1 million barrels. Demand for gasoline over the four weeks was 2.3% lower than a year earlier, averaging 9 million barrels a day. At the same time, U.S. refineries ran at 85.3% of total capacity on average, unchanged from the prior week. However analysts expected capacity to rise 0.2% to 85.5%.

Copper shed nearly 6% to lead other industrial metals lower as inventories rose and the strong dollar weighed after the U.S. election. The dollar rose against a basket of major currencies after posting its biggest one-day slide in 13 years as Democrat Barack Obama won the U.S. presidential election. Prices of the metal, used in power and construction, have fallen more than 50% since a record high of $8,940 in July. Poor demand for copper is mirrored by the continuous jumps in inventories. Stocks of the metal in LME registered warehouses jumped 5,825 tonnes, bringing the total to 247,475 tonnes. The stocks have risen more than 35,000 tonnes in the last two weeks alone. The collapse in copper prices since July has forced more than 40 percent of China's refined copper capacity to slow production, and may cost the market as much as 120,000 tonnes in lost metal in 2008. This is equivalent to 3% of China's total copper production or one month of refined imports

Courtesy: Religare Commodities


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