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Commodities continued the downtrend after Chinese trade data showed a sharp drop in activity in April. Both export and import growth were declining in China, well below expectations. This raised fresh concerns about the pliability of the Chinese economy amid softening global demand.
Coming on the back of the euro zone crisis and faltering global economic growth prospects, the trade figures from China gravely affected the commodity markets. However, there was some relief out of Europe as the European Financial Stability Facility (EFSF) said that Greece will receive the remaining aid tranche on time, despite political turmoil in the country.
Gold
Spot gold was seen rebounding after recent jolts, backed by the assurance from the EFSF on Greece bailout. The EFSF comment also strengthened the euro which had lost heavily against the dollar in the recent past. In the domestic market however, the RBI moves supported the rupee and gold traded in a narrow range in the domestic futures markets. The appreciating rupee dented gold prices in the domestic market, a report from Geojit Comtrade said.
Base Metals
Base metals complex in London Metal Exchange (LME) were seen paring initial gains on weaker-than-expected Chinese data. Being the biggest importers of metals in the world, base metals sentiments are likely to be dictated by the swings in the Chinese markets today as well.
Crude oil
Crude oil continues to remain weak after US government inventory report showed further build-up in stockpiles and weaker Chinese crude oil imports.
Rupee
The announcement by the RBI that export earners foreign currency account (EEFC) will be able to hold only 50 per cent of their balances pulled back the rupee. It is to be seen if the strengthening of the rupee will continue into today as well.
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