Commodities, especially non-agri complex traded in a narrow range except gold which was the best performer for the week. Economically sensitive commodities such as crude oil and base metals were in a trading range as there were no major triggers from the global economy.
Gold, which was one of the top performing metal amongst the non-agri pack moved up strongly as the near-month contract on the MCX made a monthly high of Rs 29,882 for 10 gm with a gain of more than 1.7 per cent on weekly basis. The rally in the bullion was mainly driven on hopes of European monetary stimulus stroking fears of inflation, thereby supporting gold prices as it is seen as hedge against inflation.
Profit booking was seen on Friday as the metal pared its gains after GDP data from the US showed the economic growth slowed in the second quarter. The US gross domestic product expanded at a 1.5 per cent annual rate between April and June, the weakest pace since the third quarter of 2011.
In the base metals complex, the red metal copper continued to consolidate in a narrow range as there were no major triggers giving a direction to prices. The worsening European debt crisis, slowing economic growth in the US and China which are the major consumer of base metals are capping the gains whereas further stimulus hopes form the US is keeping the prices supported at lower levels.
On the energy front, crude oil future price recovered sharply from its lows and is holding on to its strength at around $90 a barrel on NYMEX. On MCX, the near-month contract is hovering around psychological Rs 5,000 level. The geopolitical tensions in West Asia are keeping crude prices supported. Weakness in dollar against euro is also supportive for crude prices as it makes dollar-denominated commodities cheaper for holders of other currencies such as euro.
In the agri pack, turmeric was once again the best performer as it traded positive for the seventh straight week on back of strong fundamentals. Although some profit-booking was seen in the last two trading sessions of the week due to bearish spot cues, the commodity is expected to hold on to its strength in the coming sessions.
The rally in yellow spice was mainly driven by slow progress of the monsoon which hurts sowing operations. Also the strong domestic and export demand is supporting the price rally. The monsoon in India is now expected to remain below average, according to the Government sources which may give further boost to turmeric prices.
Turmeric is planted in the month of June and August and any delay in sowing or drop down in sowing area will keep turmeric prices up and supported.
(The author is Associate Vice-President — Commodity Research, Motilal Oswal Commodities. The views are personal.)