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COMMODITY MARKET UPDATES FOR DECEMBER 12, 2016

Gold futures closed lower in the domestic market on Friday as the dollar firmed in anticipation of an interest rate hike at next week’s Federal Reserve meeting. Market-based indicators put the odds of a Fed rate hike next week at nearly 100%. The move would be central bank’s second postcrisis rate hike. The first occurred nearly a year ago at the Fed’s December 2015 policy meeting.

Higher interest rates typically cause the dollar to strengthen, which often weighs on commodities like gold that have prices denominated in dollars.

At the MCX, gold futures for February 2017 contract ended at Rs 27583 per 10 grams, down by 0.70 per cent, after opening at Rs 27,750 against a previous close of Rs 27,777. It touched the intra-day low of Rs 27,531.

Silver futures closed lower in the domestic market on Friday as participants engaged in trimming their positions taking weak cues from global market. Marketmen attributed the fall in silver prices at futures trade to a weak trend in the precious metals overseas and profit-booking by participants at existing levels.

At the MCX, silver futures for March 2017 contract closed at Rs 41,250 per kg, down by 0.66 per cent, after opening at Rs 41,417, against a previous close of Rs 41,525. It touched the intra-day low of Rs 41,126.

Crude oil futures closed higher in the domestic market on Friday with some of the world’s biggest crude producers expected to hold a meeting to fine-tune last month’s agreement to curb production.

Traders are eagerly awaiting the outcome of a summit between oil-producing members and nonmembers of OPEC. OPEC is hoping to get other big producers to join it in cutting output, in an effort to stabilize the struggling oil market, but market participants are doubtful, which has hemmed in oil prices throughout the week.

At the MCX, crude oil futures for December 2016 contract closed at Rs 3473 per barrel, up by 1.34 per cent, after opening at Rs 3440, against a previous close of Rs 3427. It touched the intra-day high of Rs 3490.

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