In further confirmation of the gloomy macroeconomic scenario based on a raft of weak US economic data last week, growth commodities such as crude and base metals saw their values erode, wiping out whatever gains had been made in the previous several days. Oil prices fell sharply.

Not unexpectedly, the one commodity to benefit from the current environment was gold, prices of which tested newer highs last week, decisively breaking above the $1,800-an-ounce mark. Indeed, prices of all precious metals rose including, of course, silver. Gold gained 6.5 per cent and silver gained as much as 9.6 per cent week-on-week to reach newer heights in a frenzied precious metals market.

In the tug-of-war between tight fundamentals and pessimistic macroeconomic expectations, the latter seems to be winning for the time being at least. It appears that global commodity market participants are unsure about the future course of economic activity in the short-term. On current reckoning, it is going to take quite sometime for the global commodity markets to recover. Sustained flow of positive macro data alone can help change the sentiment.

Obviously, the current market conditions are not supportive to producers, but helpful to consumers. In a falling market consumers often wait in anticipation of further price falls; but given the tight fundamentals of several commodities, wait-and-watch attitude may prove to be counter-productive. It would be advisable to buy at every fall.

Gold: Even as most precious metals rose, gold vaulted to yet another new record of $1,848/oz PM Fix on Friday in the London market, rising by 1.3 per cent from the previous day. Clearly, its safe-haven status continues. Silver performed admirably rising 4.1 per cent on Friday to AM Fix of $41.98/oz.

Last week, gold prices surpassed platinum prices for the first time since 2008. However, on Friday, at $1,855/oz (up 1 per cent from previous day), platinum traded above gold. To be sure, the conditions for gold to move higher seem to be in place.

Macroeconomic uncertainties, continued supply of easy money and purchases by central banks from time to time to boost their reserves are all propelling gold higher and higher.

The market is clearly in a bullish mood. On its way further up, gold price is sure to see corrections from time to time on profit taking. Hike in margin requirements, scrap sales and seasonal weakness in physical demand will add to the pressure. In price sensitive markets such as India, there is sure to be demand compression due to high prices. However, investment demand is expected stay robust until the dark clouds of uncertainty hover over the global economic landscape.

Silver is sure to benefit from gold's ride higher. But weak fundamentals make it vulnerable to sharp price corrections. According to technical analysts, silver broke above the important recovery peak at 42.25. A close above there will confirm extension towards the next target of 43.20. Gold may extend gains through the 1878 peak, targeting new all-time highs towards 1930. The medium term outlook is bullish.

Base metals: Macroeconomic uncertainties continue to impact the complex as the outlook for global growth is far from positive. There is also a view that the price corrections may have been overdone. Over the week, all LME prices ended lower with the exception of zinc. Tin fell 8 per cent week-on-week possibly because of lack of liquidity. Friday saw some recovery in base metals prices except nickel.

China remains the key drive of the market. If the Asian giant has a soft landing, the situation will turn supportive for the complex. Falling copper prices have already encouraged Chinese demand. Tin is also said to be in demand. Demand for lead will depend on opening of battery manufacturing plants.

Technical analysts are of the view that copper is neutral within a near-term expanding range. A break above 9000 will confirm upside towards 9175. Support near 2300 is expected to underpin aluminium. Above 2450 is needed to confirm bullish traction.

Crude: Prices fell sharply last week as the sentiment worsened. Overall, in the context of the macroeconomic backdrop, the crisis of confidence is expected to continue for sometime. Fundamentals continue to be constructive.

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