Commodities: Oil marginally up, gold down as Indian imports plummet

Oil benchmarks began trading marginally up in Asia on Tuesday, while gold continued its overnight dip as Indian seasonal buying came to an end last week.

In subdued trading after public holidays in the US and most of Europe on Monday, at 07:32 BST the Brent front month futures contract was trading up six cents or 0.09% at $65.58 per barrel, while the WTI was up 16 cents or 0.27% at $59.88.

The crude oil market would be looking at key data this week to chart its course. The US durable goods orders figures are due later on Tuesday, with oil stockpiles data on Wednesday, followed by the second reading of US first quarter gross domestic product (GDP) on Friday.

Meanwhile, the gold markets were back in tenuous territory with the end of Indian seasonal buying and a stronger dollar hitting investor sentiment. Traders in Mumbai reported that Indian gold imports had fallen from an average of 67 tonnes in the week ended 21 April, to an average of six tonnes for the week ended May 22.

The news coupled with a stronger dollar sent gold prices lower overnight, with trading sources in Dubai putting gold resistance at $1,230 an ounce with support around $1,160 in a call to Sharecast. COMEX gold for August delivery was trading down $4.70 or 0.40% at $1,200.20 an ounce, while spot gold fell to $1,196 an ounce - down over $10 or 0.84%.

Chris Beauchamp, senior market analyst at IG, said gold’s hold on the $1,200 level was looking weak once again. “The metal has lost its attraction to investors in recent weeks once it has broken through $1,200, and with the dollar on the move higher a drop back in the direction of $1,180 looks increasingly likely.”

Silver trailed gold into the red down 13 cents or 0.77% at $16.92 an ounce. Meanwhile, the base metals market also began trading in the red on the London Metal Exchange. Copper (down 1.4%), lead (down 1.3%), tin (down 0.4%) and zinc (down 1.3%) all opened lower on Tuesday, with nickel (down 3.6%) bearing the brunt.

Meanwhile, global investment bank Goldman Sachs reiterated its bearish call on the wider commodities market in a note to clients on Friday, noting that a rally recorded in March would not be sustained in all likelihood. “We see downside pressures on commodity prices re-emerging. The recent rise in commodity prices is clearly at odds with our lower-for-longer bearish view across the complex.”

The bank was particularly bearish on copper predicting a fall to $5,200 per tonne in 12 months from a current level of $6,179.00.

“We believe that current prices represent a very strong selling opportunity, for producers and investors alike. Despite the recent partial retracement in prices, the structural bear copper narrative remains intact,” GS analysts added.

Finally, on the agricultural commodities front CME live cattle (down 0.13%) and ICE cocoa (down 0.32%) contracts were trading lower, while CBOT corn (up 0.35%), wheat (up 0.39%) and ICE cocoa (up 0.09%) were in the green.