Base metals trade higher except copper, gold in tight range

India's food inflation eased slightly to 7.47 percent for the week ending 7th May, as prices of pulses and vegetables dropped. Food inflation stood at 7.70 percent in the previous week. While the fuel price index also eased to 12.11 percent in the same week from the previous 12.25 percent in the prior week.

UK’s retail sales rose more than expected by 1.1 percent in April as against the rise of 0.2 percent in March. Markets had estimated retail sales to increase 0.9 percent in April. The country's confederation of British Industry (CBI) industrial order expectations index rose to the level of -2 in May from the previous -11 in April. Markets had estimated the index to stand at -5 in the current month.

Spot Gold traded slightly higher around 0.1 percent mainly due to weakness in the US dollar and Euro Zone debt crisis which have boosted the safe haven demand for gold. Additionally, rising crude oil prices has also increased inflation fears which fuelled inflation- hedge demand for the yellow metal. It touched an intra-day high of $1499.51/oz and was hovering at $ 1496.24/oz till 4.o0 pm 1sT today. On the MCX, the yellow metal prices declined 0.5 percent on account of Rupee appreciation and touched an intra-day high of Rs 21.965/10 Gms.

Except copper, all the base metals traded higher on the LME today mainly on the back of a weaker dollar. Additionally, positive sentiments in the European markets also provided further support. However, appreciation in the Indian Rupee led metal prices to trade lower on the domestic bourses. Nickel is the top performer of the day, as the metal prices gained around 0.6 percent on the LME till 4.00 pm 1ST.

Nymex crude oil prices gained around 0.3 percent today mainly due to a dollar weakness along with wildfire in Alberta which disrupted oil supply from Canada. Decline in the US crude oil inventories also helped prices to trade higher today. It touched an intra-day high of $ 100.42/bbl and was hovering at $100.38/bbl till 4.00 pm 1st. Rupee appreciation exerted pressure on the oil prices on the MCX.

Outlook

We expect base metals to trade higher in today mainly on the back of weakness in the dollar and upbeat sentiments in the European equity markets. But sharp gains will be capped due to ongoing Euro Zone concerns.

Crude oil is expected to trade higher today mainly tracking weakness in the dollar and supply disruptions from Canada.

We expect gold to trade higher today mainly due a weaker dollar, rising crude oil prices and ongoing Euro zone debt concerns will provide support to bullion.