Gold, Silver off 16 years high

Gold spot and future prices, in the international markets, fell from 16-year highs to close lower on Thursday December 2, 2004, on profit taking sparked by strengthening in dollar. February gold on the Comex division of New York Mercantile Exchange ended lower by US$3.60 at US$452.30 a troy ounce, after scaling high at US$458.70. Spot gold traded to US$449.70/0.40, down from 16-year peak at US$456.75. Afternoon London fix was at $454.20. Silver too, tracking movement in Gold, tumbled lower to end the trading session at US$7.96. March silver futures reached as high as US$8.235, strongest since April, before touching a session low at US$7.915. Silver futures peaked this year at US$8.50 back in April 2004. Spot silver priced at US$7.87/90, below an eight-month high at US$8.15. The London fix was at US$8.04.

In the domestic bullion markets Gold and silver scaled new peaks. Gold hit an all-time high of Rs6,690 per 10 gram (999 purity) and silver an all-time high of Rs12,340 per kg amid thin trading. Pure gold (99.9 purity) gained Rs15 over the previous close of Rs6,660 per 10 gm. Standard gold (99.5 purity) ended at Rs6,635, showing a small gain of Rs5.

Oil slips to three-month lows

Crude oil futures slipped to three month lows as higher global oil output and slowing demand growth led to increasing global inventories. IPE Brent crude futures for January delivery slid US$2.16 to US$40.15 a barrel in London. January Nymex WTI lost US$2.24 to end the session at US$43.25 a barrel in New York. Crude oil prices have been on the decline since last three trading sessions. The front-month Brent contract price lost more than 13% in the last three sessions. The falls were triggered by a sharper-than-expected gain in US distillate stockpiles. Crude and gasoline inventories also advanced. In London, IPE gasoil prices dropped to US$379.00 a ton. The benchmark gasoline price has fallen by more than US$100 since hitting US$500 for the first time ever in October.

Copper Futures Fall in Shanghai

Copper futures in Shanghai fell, tracking declines in London after some speculators sold the metal to lock in gains. On the London Metal Exchange (LME), the copper failed to breach resistance level of US$3,140 a metric ton. Copper for delivery in three months fell 0.55% after touching US$3,140 a ton, its resistance level. Copper has gained nearly 10% in the past month as demand from China, the biggest user of the metal, drained inventory to less than three days of global demand. The most-actively traded January 2005 contract in Shanghai fell 240 yuan a ton, or 0.8%, to close at 29,910 yuan a ton. It had rose to 30,280 yuan, the highest since October 13, 2004. Meanwhile, Copper for delivery in three months on the LME was traded at US$3,106 a ton on Thursday December 2, 2004, compared with previous close of $3,095. It rose to high of US$3,135 a ton.

Inventories monitored by exchanges in London, New York and Shanghai have fell 85% this year to 130,477 tons. LME stockpiles rose 675 tons, or 1.1% to 59,975 tons. Copper for March delivery on the Comex division of the New York Mercantile Exchange fell 0.40 cent, or 0.28%, to US$1.43 a pound.

Panel suggests deregulation of sugar industry

In order to unshackle the sugar industry from Government control, the SK Tuteja Committee has called for the scrapping of the monthly release mechanism for free sale by October 2005. The panel has also suggested a financial package for sugar mills in drought and flood affected states, rehabilitation of sick co-operative sugar mills and VRS, to be funded by commercial banks. The 16-member committee also said that the payment to sugarcane farmers under the Statutory Minimum Price (SMP) mechanism should continue. It has worked out a Rs65bn debt restructuring package for the Rs240bn sugar industry. The package includes rescheduling of loans as on March 31, 2004 for 10-12 years, and a three-year moratorium on interest and principal payments.

Rubber prices ends lower

Lack of buying interest pushed the domestic spot rubber prices lower. However, sheet rubber RSS4 closed steady at Rs50 as covering groups continued their purchases in limited quantums. Latex 60% improved by a rupee as the major processors were not willing to sell at low rates. The rubber futures ruled weak quoting the December delivery at Rs51.35 (51.41) a kg. The near-month January delivery was quoted at Rs52.11 (52.14), February delivery at Rs53.11 (53.39) and March delivery at Rs54.01 (54.28) per kg for RSS 4. Spot rubber of RSS 4 Rs50 (50) per kg, RSS5 Rs48.50 (48.75), ungraded Rs46.00 (46.50), ISNR 20 Rs49 (49.25); latex 60% Rs38.50 (37.50).

Disclaimer: We take due care in compilation of data, but under no circumstances shall we be legally responsible for the outcome of any action taken on the basis of information given in this newsletter. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advisors as they believe necessary.Indiainfoline takes no legal responsibility for accuracy or completeness of information or advice given. This material is for personal use only."India Infoline Ltd (IIL) and India Infoline Commodities Pvt. Ltd (IICPL) do not have any positions in any of the commodities recommended and which are currently displayed on the site www.indiainfoline.com and www.5paisa.com. IIL and IICPL do not do any deals on their own account (proprietary trading) except for testing and demonstration purposes. IIL and IICPL also has an internal compliance manual in place which restricts the team who analyze and gives information on various commodities and investment opportunities, to place orders on commodity futures only through IICPL and only after the said recommendation has been displayed on the above mentioned websites