Increasing demand and reducing supply due to erratic climatic conditions around the world is driving the agro commodity prices higher and will continue to do so.During the month of October gold prices exhibited a mixed trend. The prices rallied higher once fed announced its plans for third round of Quantitative easing. The U.S jobs data and sentiments surrounding recovery encouraged the concern that Federal Reserve may stall its implementation of QE3. This in turn strengthened the dollar. Sentiments surrounding recovery played a major part in people favoring dollar against gold. Gold has seen a drop from 1787 per ounce on October 1 2012 to 1719 by end of the month. In India, with the festive season and marriage season on the way, the demand for gold is expected to drive higher.
Unpredictable climatic conditions continued to play a major role in commodities market. Diminishing supply of food grains and increasing demand is going to drive the agro-commodities higher. The demand due to festive season is going to increase existing woes in commodities section for India. The already high food inflation is expected to soar up higher. This time for diwali, Indians can expect a rocket cracker named after inflation. Subdued demand pulled down the alloy metal prices in London Metal Exchange. The fall of Euro and heightened disappointment of corporate earnings overshadowed the third-quarter economic growth numbers posted by United States. Speculation that Hurricane Sandy will slow the economic growth in United States also aided in sluggish demand for base and alloy metals.
Europe’s continuing debt crisis, weak quarterly forecasts from the U.S. corporations, gasoline supply problems and refinery shutdowns affected the crude oil prices. The sentiments surrounding economic Growth across the globe also played their part in the decline of the crude oil prices.