Mr. Prathamesh Mallya AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd
Crude and Metal prices continue to get hampered as COVID-19 cases rise while supporting Gold – An alarming increase in the coronavirus cases across the globe elevated the yellow metal demand while denting the Crude Oil and Base Metal prices. Crude prices declined further on the account of depleting U.S. Crude inventories and additional cuts from Saudi Arabia. A stronger U.S. Dollar pressurized the industrial metal price.
Spot Gold ended lower by 0.7% and closed at $1,843.4 per ounce. Rising bets on receiving additional stimulus aid led to higher U.S. Treasury yield which elevated the U.S. Dollar. However, a stronger U.S. Dollar dented the appeal for Dollar-denominated Gold among other currency holders.
President Joe Biden’s administration is expected to infuse a considerable stimulus to revive the U.S. economy. In contrast, inflation woes on account of additional stimulus aid kept the losses in yellow metal’s price within the check. A majority of investors shifted towards Gold – which is considered a hedge against currency debasement and inflation.
Furthermore, the worsening of the global economic scenario and increasing worries over the new virus strain supported the demand for investment haven.
WTI Crude ended lower by 0.6% and closed at $52.9 per barrel as global demand distress continued to hamper oil prices.
According to a recent report from the Energy Information Administration, the U.S. crude stockpiles have declined by 3.2 million barrels. One of the significant oil producers, Saudi Arabia, announced an additional production cut of one million barrels per day in February’20 and March’20 to keep the production steady amid the pandemic ridden scenario. This extended some support to crude oil prices.
However, an alarming increase in the COVID-19 infected cases and renewed curbs in some of the major economies, including the U.K., China, and Germany affected the demand outlook of crude and pushed the prices downwards.
The pandemic’s widening impact is likely to continue weighing down crude prices.
LME base metals ended in the red amid an alarming increase in coronavirus cases. A stronger U.S. Dollar further pushed the prices lower.
However, additional stimulus aid released by the global central banks to tackle the pandemic’s impact limited the losses in industrial metals’ price.
The mining ban in the Philippines due to environmental concerns and protests in New Caledonia raised severe supply concerns for Nickel and pushed the prices higher.
China, the largest metal consumer, reported an alarming surge in coronavirus cases, which led to a lockdown in certain regions and hampered the industrial metal prices.
LME Copper rose by 0.42% and closed at $8,009 per tonne amid dropping LME Copper inventories. In contrast, additional stimulus aid from the U.S. supported the red metals price.
This was conveyed to Prittle Prattle News through a press release.