Commodity Tips

China’s slowing economy could have grave consequences for Gold Prices. A slowdown in China augurs for lower inflation or perhaps even deflation and higher real rates which drastically tighten the money supply & movement which all boils down to being highly negative for Gold Futures prices. China GDP grew 7.4% in the third quarter, matching analyst estimates, slowing from 7.6% in the second quarter and 8.1% in the first. Industrial production rose 9.2% as against the 9% expectations. China’s GDP reached 35.35 trillion yuan (5.61 trillion U.S. dollars) in the first three quarters. China’s stocks rose, driving the benchmark index to a five-week high, after Premier Wen Jiabao said the economy has started to stabilize and industrial production and retail sales data beat estimates. Wen said the government is confident of achieving annual targets and the Chinese Economy will continue to show “positive changes,” the Xinhua News Agency reported. China’s industrial value-added output grew 10% year-on-year in the first nine months of 2012. The Shanghai Composite has rebounded 6.4% since reaching a three-year low on Sept. 26 on expectations regulators will introduce measures to stabilize the market ahead of a once- in-a-decade power transition of the Communist Party in November. The gauge is still down 3.1% this year and trades at 10 times estimated earnings, compared with the 17.9 average since Bloomberg began compiling the weekly data in 2006. Today’s data in China followed reports showing exports exceeded forecasts in September and money supply grew at the fastest pace in 15 months. Inflation last month was close to the slowest pace in two years and producer prices fell the most since 2009, government data showed on Oct. 15, giving authorities more room to ease policy.

MCX Crude Oil News

MCX Crude oil futures are trading with steady gains today as the global WTI futures consolidated above $92 per barrel.. The global equities are in a positive mode today on strong US industrial output numbers and reports that Spain is mulling a request for a line of credit from the European Union. Euro jumped to near one month high above 1.3100 levels against the US dollar today and the WTI futures are quoting at $92.36, up 28 cents per barrel on the day.

In economic news, US industrial output rebounded a bit in September after a steep drop in the prior month when Hurricane Isaac took a toll on oil output, the Federal Reserve reported Tuesday. US industrial output edged up 0.4% in September after a revised 1.4% drop in the prior month, originally reported as a 1.2% decline.

The US stocks rallied impressively last night and helped WTI futures scale up from its lows. The counter is quoting up above $92 per barrel right now as the European markets trade with little gains. MCX Crude oil futures are trading at Rs 4881, up Rs 22 per barrel on the day, with a 9.80% gain in the open interest. The prices have been almost stagnant during afternoon trades.