Commodity prices have risen to highs for the year, with Brent crude oil reaching $74 per barrel and copper prices at a 10-month high, boosted by an increase in pending US home sales. As risk appetites have increased in global equities, the US dollar has fallen to its lowest point against other currencies since 2009. This has strengthened commodity currencies like the Canadian and Australian dollars. Gold and silver prices have also risen but remain below earlier yearly highs, with gold closing just under $970 per ounce and silver up over 3% to $14.60 per ounce. For Indian investors, higher oil prices remain a concern for India's recovery due to its large petroleum imports and declining exports potentially worsening its

1. Commodities Climb
By Mohit Satyanand
Shedding the inhibitions I wrote about a couple of days ago, commodities have now hit
a high for the year. Brent crude is up at 74 dollars a barrel, and copper is at a 10-month
high, boosted by the news that pending US home sales are ticking up.
With global equities continuing to gain, even though weakly, the appetite for risk is
resolutely moving to center stage. This means that fewer investors are looking to the
dollar - and USD treasuries - as a safe refuge. In turn, this has sent the dollar to a 2009
low against a basket of currencies, as measured by the dollar index. This fact, and the
enhanced optimism for commodities, has marked up the so-called commodity
currencies, like the Canadian dollar and the Australian dollar.
Gold and silver are moving up, too, though they have not yet hit their earlier highs of
the year: gold closed just short of 970 dollars per ounce yesterday, up a little over 1%
for the day; silver gained more than 3% to 14.60 an ounce, but it has tended to be a lot
more volatile than gold, and is still 30% off its life-time high of over 20 dollars an ounce.
For Indian investors, my belief is that higher oil prices remain a significant issue in the
recovery: petroleum is our single largest import, and exports continue to drop. If our
balance of payments deficit grows, the rupee could be under pressure, setting into
motion concerns for the overseas investor, who doesn’t like to see his return pressured
by adverse movements in currency. And with the huge borrowings program of the
Indian government, foreign funds are critical to our growth.