Oil Trades Above $107; Follows Asia

Crude oil futures are trading above $107 a barrel in the Asia electronic session today buoyed by rally in the Asian equities and also on fears of Western military intervention in Syria.
Most Asian stocks advanced Monday after downbeat U.S. home sales on Friday led some to expect the Federal Reserve may delay paring its bond purchases. The Shanghai Composite Index edged 0.3% higher in choppy trade, and Hong Kong’s Hang Seng Index rose 0.7%, with both benchmarks also aided by some better-than-expected results from various Chinese firms.
Crude oil for October delivery advanced 51 cents to $106.93 a barrel, adding to Friday’s 1.3% rally on the New York Mercantile Exchange. The contract rose as high as $107.37 earlier in the day.
The advance came as the U.S. reportedly considered using military force in the Syrian civil war after the government there allegedly used chemical weapons against civilians. While Syria isn’t a major oil producer, unrest in the key petroleum-producing Middle East region can prompt broad concerns about crude supply, which in turn bid up oil futures.
The U.S. dollar swung between small gains and losses against major counterparts Monday. The ICE dollar index, which measures the U.S. currency against six others, slipped to 81.360, down marginally from 81.366 late Friday in North America.
This weekend, Federal Reserve officials finished their annual retreat in Jackson Hole, Wyo., and experts attending the conference said the Fed is on track to reduce stimulus efforts in September, with a desire by bank officials to return to conventional monetary policy. The Fed currently buys $85 billion a month in assets to aid economic growth.
MCX September crude oil futures may open today’s session near Rs 6870 levels with resistance near Rs 6900-40 levels.  

MCX Gold Tips Update

Gold futures got a boost on the disappointing jobs data, which put to rest recent sentiments that the Federal Reserve may consider tightening policy in the coming months.

The U.S. Bureau of Labor Statistics reported earlier the economy added 88,000 nonfarm payrolls in March, way below expectations for a gain of 200,000 and below the 268,000 jobs added in February.

The private sector added 95,000 jobs last month, after an increase of 254,000 in February, missing expectations for a 209,000 rise.

The report also showed that the U.S. unemployment rate ticked down to 7.6 per cent in March, from 7.7 per cent the previous month, as more Americans left the labor force.

The news sent the dollar falling and gold rising on expectations for the Federal Reserve to keep monetary stimulus programs in place, including its USD85 billion monthly bond-buying program that weakens the greenback as a side effect.

The June COMEX gold futures had tumbled to 10 month low of $1539.4 earlier this week, however it jumped back to end the fortnight at $1575.9 an ounce.

It rallied to a one-month peak in March on worries about fiscal stability in Europe, as politicians scrambled to clinch a bail-out for Cyprus.

Fear that central banks' money-printing to buy assets will stoke inflation has been a key driver in boosting gold, which rallied to an 11-month high in October after the Fed announced its third round of aggressive economic stimulus.

The international gold prices are down nearly $80 from its last year's level as the US dollar has appreciated.

The June COMEX gold futures are trading at $ 1575.9 an ounce as on 5th April 2013 whereas last year the metal has been trading near $1650 an ounce levels.

The US dollar has gained nearly 2 per cent in April 2013 compared to the same period last year.

However the MCX gold futures are trading higher than it was during the same period last year.

The MCX June gold futures finished at Rs 29710 per 10 grams on 5th April 2013 whereas during the same period last year gold prices were hovering around Rs 27500-28000 levels.

One reason for this difference is depreciation in the Indian currency. The Rupee is down nearly 9 per cent at 54.88 per US dollar as compared to 50.5 in March 2012.

The Rupee is expected to depreciate further in the new fiscal year because a weak currency is desirable to fix India's current account.

The shortfall in India's current account, the broadest measure of trade, widened to $32.6 billion in the quarter ended 31 December, or 6.7 per cent of gross domestic product, as imports of oil and gold surged