Once again it was a shining week for precious metals as silver futures on the MCX posted a gain of more than 1.5 per cent, whereas gold rose by nearly one per cent. On the COMEX, gold hit a five-month high, while silver gained nearly three per cent on Friday as the US Federal Reserve Chairman comments raised hopes of more quantitative easing in the US.
US Fed chief Ben Bernanke raised concerns over unemployment saying that the recovery was too slow and that a largescale asset purchases remained an option to boost the economy.
Bullish factors for gold include investment demand which that is on the rise and is at record levels, an uncertain global economy prompting investors to resort to haven, stimulus hopes from developed economies such as the US, Euro Zone and China triggering inflationary worries and central bankers turning net long in gold.
Crude oil remained flat last week with a gain of 0.07 per cent on the MCX. Prices were supported earlier in the week as hurricane Isaac, which was declared as Category-1, was expected to disturb production facilities near the Gulf of Mexico. But prices fell later as the hurricane turned into a storm without causing much harm.
Base metals complex showed some weakness with nickel and zinc futures on the MCX being the worst performer with a fall of more than two per cent each. Copper registered a loss of 0.57 per cent whereas aluminum fell by 1.86 per cent. The only metal that held firm was lead which rose by 0.46 per cent. As metals are economically sensitive, commodities more stimulus would mean a rise in demand taking prices higher and vice versa.
Agriculture commodities were mixed with the NCDEX sugar being the best performer with a gain of nearly five per cent, whereas chilli was the worst perform with a fall of more than 10 per cent last week.
A majority of commodities such as spices and oilseeds fell as heavy rain in key producing areas capped the upside. Sugar futures after consolidating for a major part of 2011 and 2012 extended gains in Q3 mainly due to an estimated drop in the output in key producing State resulting in an improvement in demand.
Sugar output in India's top producing State, Maharashtra is likely to fall by 30 per cent year-on-year to 6.3 million tonnes in on poor cane yield due to drought and diversion of the crop for fodder, according to a a State official.