Weak Dollar uplifts major commodities; Short-lived phenomenon

Oil prices hit new 2016 highs on Wednesday reporting the third consecutive price hike. The price rise was in the wake of supply outages led by fall in US crude inventories. Crude oil futures hit 51.34 USD/barrel while Brent Crude futures hit 52.50 USD/ barrel. Few analysts maintain optimistic view in oil till 60 Dollars; however, few say that oil has reached its overbought zone as supply shortage is a short-term phenomenon.

Weaker Dollar and rising demand has heightened the prices. Dollar fell nearly 2.4 per cent in a month against many other major currencies that have made Dollar traded oil imports cheaper. 

According to the US Energy Information Administration (EIA) US crude stocks declined by 3.23 million barrels in the last week to 532.5 million barrels, reporting its third straight weekly fall.

Gold too hit three week high with an overnight jump of 1.5 per cent buoyed by weaker Dollar and faded interest rate hike expectations wherein FED may hold rates amid weak jobs data. Spot gold hit a high of $1266.01, highest since mid May.

However, Gold paused after hitting its largest in last four months. Crude oil too rose but could not sustain above its multiple resistance. Both the commodities may see a downturn as the buoyancy was news based. Investors remained cautious and lowered demand, driven by weak global markets. Moreover, considering India, gold prices retreated on easing demand from jewelers and customers. Rupee appreciated nearly 25 paise against Dollar thus making imports cheaper.