The Hindu Business Line : Global commodity prices tumble

The prices of precious and base metals plunged on Monday in the international markets as speculators pulled out fearing a fall in demand due to rising interest rates.

Gold, silver, copper, aluminium and zinc moved down in early trade on the London Metal Exchange (LME), triggering a sharp decline in the Indian markets.

Copper and aluminium fell 6-7 per cent in early trade on LME. Zinc moved down by 10 per cent. Share prices also moved down with the key benchmark index falling 462 points. "Monday's fall in commodity prices is a result of speculators pulling out. Prices will bounce back," said a research analyst at a commodity broking firm.

The domestic market for both precious as well as base metals reflected the global trend.

Standard gold spot prices fell nearly Rs 250 or 2.5 per cent to Rs 10,265 per 10 g from the previous day, while June futures contracts dipped Rs 500 or 4.75 per cent to trade at around Rs 10,342 per 10 g.

"This correction was overdue and one should not panic," said Mr Raghavan Sundararajan, an analyst with Kotak Commodity Services Ltd.

At MCX, gold June contracts were down sharply to Rs 10,166 per 10 g from the day's high of Rs 10,672 on profit taking.

Later, the contracts recovered slightly to Rs 10,342 per 10 g, a local trader said. MCX silver July contracts quoted at Rs 20,380 per kg intra-day.

Gold traded below $690 an ounce in early London trade and analysts expect the yellow metal to go past the $700-mark.

Domestic base metal prices dipped in tandem with the sharp fall in prices at LME.

The rise in US bond yields also helped the fall in commodity prices. However, fundamentals for precious and base metals remain strong as demand is seen robust.

Analysts said Monday's decline would not impact the realisations of producers of primary metal.

More Stories on : Commodity Markets | Metals | Gold & Silver

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