(By: Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd.)
The rising COVID-19 cases and an increasing slump in the global economy dented investors’ sentiments. Spot Gold traded higher while crude oil and base metals ended in the negative. Bleak demand for the crude oil might further dent the prices of crude oil, whereas escalating U.S.-China tension added to negative base metal prices.
Spot Gold prices increased by 0.7% amid the rising tension between the U.S. and China. The continuous rise in the COVID-19 cases worldwide dented hopes of economic recovery, thereby boosting the yellow metal’s demand.
Market sentiments were further weighed down by stalling U.S. employment growth and increased permanent job losses in the last month. This also indicated towards loss in hopes of paced economic recovery anytime sooner.
The world’s largest economy indicated a weaker labor market. The high unemployment levels further boosted the demand for the safe haven, Gold. Gold prices are expected to trade sideways on MCX in today’s session.
WTI Crude prices declined by over 6% during the last week amid rising demand concerns during the prevailing pandemic. A surge in U.S. oil inventories and appreciation in the U.S. Dollar further weighed down the crude oil prices.
U.S. Energy Information Administration (EIA) reported that the crude inventory level increased by 2.0 million barrels in the week ended on 4th September 2020.
Oil prices declined as the top Crude exporter, Saudi Arabia, decided to cut the Official Selling Price (OSP) to Asia for the October month keeping in mind the falling crude oil demand.
OPEC and its allies are scheduled to meet on 17th September to discuss the current oil market scenario. Since August, after considering the growing crude oil demand, OPEC+ had trimmed the production to 7.7 barrels per day.
The storm hitting the U.S. gulf production is likely to limit the losses for crude. Oil prices are expected to trade sideways on MCX in today’s trading session.
LME Base metals ended in the red during the last week amid the rising COVID-19 cases and increasing tensions between the U.S. and China- the world’s largest economies.
The U.S. President suggested ending all ties with China after the U.S. elections scheduled to take place in November this year. This deteriorated the relations between the two countries, further denting the prices of the industrial metals.
China’s exports increased as the world’s largest metal consumer for the third consecutive month in August’20, limiting the losses in the industrial metal prices.
China’s refined zinc production increased by 2.8% and stood at 450,000 tonnes while the country’s nickel output increased by 15%.
LME Copper ended lower by 0.7%. However, the losses were capped by the Copper inventories on the LME verified warehouse. Copper prices were thus supported by rising demand from China and depleting LME Copper inventories. Copper is expected to trade higher on MCX in today’s session.
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