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With the US FOMC (Federal Open Market Committee) remaining in a ‘wait and watch’ mode as far as rate cut is concerned while leaving the door open for further quantitative easing, uncertainty is likely to prevail in global commodity markets.
The dollar tumbled to key support levels after the Federal Reserve Chairman Mr Bern Bernanke’s press conference subsequent to the US FOMC meeting.
Markets were seen guarded on Wednesday, waiting for cues on another round of monetary policy easing.
Gold
Ahead of the US FOMC rate announcement, spot gold traded almost flat before taking a dip during afternoon. Dollar index slipped to a three-week low ahead of the FOMC decision. Pressure on dollar was evident.
Meanwhile, at the Multi Commodity Exchange following the initial fall during the opening hours, gold was seen trimming some of its losses, a report from Geojit Comtrade said.
Gold June futures contract at MCX tumbled in late night trades after the US FOMC announcement but more than recovered its losses towards close. Rupee easing from the recent lows also weighed on the sentiment.
Base metals
Base metals on the London Metal Exchange were seen rebounding from initial losses incurred during morning trades. LME copper gained more than one per cent.
At MCX, base metal complex traded steady except for copper, which was seen edging higher, tracking gains in the international market.
Crude oil
Crude oil rose ahead of the EIA (Energy Information Administration) weekly inventory report.
API (American Petroleum Institute) data indicating a decline in crude oil and product inventories lifted crude oil prices to a week’s high. However, EIA inventory forecast could show a build-up in crude oil stocks.
Earlier, the UK economy shrank in the first quarter as construction output slumped, pushing Britain into its first double-dip recession since the 1970s, and posed a serious blow on the face of world economic growth outlook.
Crude May contract at MCX tumbled after the US FOMC announcement but managed to pull back later.
S&P downgrade
Ratings agency Standard and Poor has cut India’s outlook to negative from stable. This could further dent investors’ sentiment in the country already caught up by rising inflation and weakening growth.
The downgrade for India and the wait and watch attitude of US FOMC would be the guiding factors for India’s commodity markets today.
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