Gold down, metals up as China markets open

Gold price fell from a high of $1,263 last week to $1,209 down 4.3%

The price of gold fell sharply on Monday in the global and domestic markets after heavy profit booking as Chinese markets open after holidays and a rebound in equities all over.

The price fell from a high of $1,263 an ounce on Thursday to $1,209, down 4.3 per cent. The dollar index went up to 96.34, by 0.4 per cent. Silver was down by 4.1 per cent to $15.29 an oz.

At Zaveri Bazar here, standard gold fell 2.4 per cent to close on Monday at Rs 28,415   per 10g from Friday’s close of Rs 29,110. Silver fell 2.5 per cent from Rs 38,175 a kg to Rs 37,210 a  kg.

Chinese investors who were buyers when gold was below $1,100 an oz have booked profit, expecting prices to not rise sharply from here. In the Indian markets, too, traders have been selling precious metals and some investors have followed. Gold on Friday was trading at a $32.5 discount to the cost of import, which means nearly Rs 700 lower than the cost per 10g, as traders sold gold stocked earlier. On Monday, gold was trading at a  discount of $ an oz.

Brent and US crude oil futures edged lower on Monday as the dollar regained ground and as weak Chinese trade data stoked concern about demand in the world’s biggest energy consumer. However, in the afternoon trade, Brent was trading at $33.32 a barrel or 3.2 per cent higher.

London copper and nickel surged on Monday after China markets reopened following a week’s holiday, and investors stocked on the most heavily sold-down metals. As metals are already at or below the cost of production and factories have low inventories, as the seasonally strongest quarter for manufacturing gets ready to grind into gear, traders are betting prices can’t go much lower.

Three-month copper on the London Metal Exchange (LME) had climbed 2.1 per cent to $4,596.50 a tonne in morning trade, extending a 1.2 per cent gain from the previous session, which had seen prices end the week about two per cent down. LME nickel rallied 4.5 per cent, reversing a four-plus per cent tumble last week. On the Multi Commodity Exchange futures, copper was trading 1.7 per cent higher and aluminium was up around one per cent from Friday’s close.

Metals were underpinned by hopes for more stimulus after China’s January trade performance was worse than expected. Exports declined, though China has allowed the yuan to weaken nearly six per cent against the dollar since last August, underlining the extent to which global demand has weakened. China stocks ended lower but pared initial losses.

Discount on Monday also remained the same at $32.5 per ounce despite fall in prices, indicating market to remain over supplied.