By Mr. Prathamesh Mallya, AVP- Research
Rising Coronavirus Cases support Gold while denting Crude and Metal prices
Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd shared to Prittle Prattle News through Press Release
Gold ended lower last week as U.S. Treasury yield rose and made Dollar-denominated Gold less popular. However, a rapid increase in rising Coronavirus Cases (COVID-19 cases) limited losses. Crude ended higher on account of Saudi Arabia’s production cuts to keep the production steady during the pandemic. Base metals projected a mixed trend amid a rising number of infected cases in China and a strengthened U.S. Dollar.
Gold
Spot Gold ended lower by 1% amid rising U.S. Treasury yield. An increase in U.S. Treasury yield uplifted the greenback and made Dollar-denominated Gold less attractive for other currency holders.
The U.S. labour market continued to deteriorate, which limited the losses for the yellow metal. The number of Americans claiming for the unemployment benefit surged at an alarming rate and dented the market sentiments.
Furthermore, worsening of the global economic scenario and rising worries over the new virus strain capped the losses for safe haven, Gold. Strict lockdown in France, Germany, and China dampened the market outlook and boosted the yellow metal’s appeal.
A steady rise in the U.S. Dollar might continue to weigh down Gold prices.
Crude Oil
WTI Crude ended higher by 0.2% amid depleting U.S. Crude inventories. Additional output cuts from Saudi Arabia in the coming months further supported Oil prices.
According to the report released by the Energy Information Administration, the U.S. Crude stockpiles declined by 3.2 million barrels.
Saudi Arabia announced additional production cuts of one million barrels per day to keep production steady amid the pandemic in February’20 and March’20, which levied further support to Oil prices.
In contrast, the rising number of COVID-19 cases led to renewed curbs in some of the world’s major economies including the U.K., China, and Germany. This undermined the outlook for Crude and capped the gains in Oil prices.
A widening impact of the coronavirus pandemic in major crude-consuming nations might continue to weigh on Oil prices.
Base Metals
LME Base metals gave mixed results with Nickel leading the gains. However, an increase in the COVID-19 cases and strengthening of the U.S. Dollar capped the gains for industrial metals.
COVID-19 cases were also on rise in China, world’s largest metal consumer, and affected industrial metal prices. Resurgence of the virus in China further dented the demand outlook for base metals.
However, hopes over additional stimulus aid to be released by the global central banks to curb the pandemic’s impact extended some support to industrial metal prices.
Disruption in mining in Philippines due to increased environmental concerns pushed base metal prices higher.
Copper
LME Copper ended higher by 1% as Copper inventories tumbled. An additional stimulus aid to be infused by the U.S. for economic revival uplifted the prices for the red metal. Hopes over steady recovery in China might provide some support to industrial metal prices.
