Industrial commodities moved up on Monday due to a perceived easing of the trade war between America and China.
The iComdex Composite index on the Multi Commodity Exchange jumped 2.4 per cent to 580.67 points in late afternoon trade, from 567 at the previous close. The most active crude oil contract surged 4.6 per cent for delivery later this month, to trade at Rs 3,741 a barrel. Followed by zinc and copper, up 2.9 per cent and 2.6 per cent, respectively.
Following these moves in the industrial segment, bullion prices also rose. Gold for delivery in February jumped 1.5 per cent to trade at Rs 30,710 per 10g. Silver for delivery in March was Rs 36,925 a kg, a rise of 2.5 per cent from the previous close. The price of gold at Zaveri Bazar in Mumbai was up by Rs 265 to Rs 30,655 for 10g. A lower rupee value added to gold's price.
"Easing of the US-China trade war (at the G-20 government heads meet in Buenos Aires), coupled with one of the Opec (the petroleum exporters' cartel) member's decision to reduce supply, supported the crude oil rise on Monday," said Naveen Mathur, director, Anand Rathi Shares and Stock Brokers.
The price rise in industrial commodities also took place on the benchmark global exchanges. On the London Metal Exchange, copper moved up 1.9 per cent to $6,314 a tonne. Zinc and other base metals in this category rose one per cent in early London trade on Monday, due to a weaker dollar and reports of Qatar leaving Opec.
Crude oil jumped over five per cent after the Qatar announcement. US light crude rose $2.92 or 5.7 per cent to a high of $53.85 a barrel, before easing to around $53 a barrel in early trade. Brent crude rose 5.3 per cent or $3.14 to a high of $62.6, before easing to $61.60 a barrel.
"The China-US trade truce over the weekend, the US-Canada-Mexico pact that was signed on Friday and change in the hawkish stance of the US Federal Reserve all signal a risk-on for equity markets. Commodities are buoyant, including crude oil," said VK Sharma, head of the capital markets group at HDFC Securities.
In China, the January contract prices for base metals were stronger by an average of 1.9 per cent, led by a 3.4 per cent rise in zinc, while copper was up 1.1 per cent.
In contrast, agricultural commodities posted a decline. Soybean for delivery in March on the National Commodity and Derivatives Exchange declined by 0.6 per cent Rs 3,464 a quintal.