By : Prathamesh Mallya, Chief Analyst, Non Agri Commodities and Currencies, Angel Broking Ltd.
The main concern of world governments remained on how to remove lockdown measures and also ramp up healthcare facilities to protect their citizens. Hopes of a speedy economic recovery persisted but fears about a second resurgent wave continued to play in the mind of global leaders.
On Tuesday, spot gold prices ended lower by 0.74 per cent to close at $1727.0 as rising demand for riskier assets by many businesses lowered the cost of the yellow metal. Gold prices were dampened as many nations removed lockdown measures and unfurled plans for a speedy economic recovery.
Widespread riots flared in the U.S.A after George Floyd died in police custody. President Donald Trump promised to use stern force and the military to dispel the protestors. Furthermore, the tensions between the U.S and China weighed on market sentiments and limited the downfall in gold prices.
On Tuesday, Spot silver prices ended lower by 0.99 per cent to close at $18.1 per ounce. Prices on the MCX dipped over 3 percent closing at Rs.49,080 per kg.
On Tuesday, WTI Crude prices ended higher by 3.87 per cent to close at $36.8 per barrel after reports by the OPEC and Russia indicated that the aggressive production cuts might continue in the following months. The resumption in air and road traffic, coupled with the reopening of factories and production units in many places led to the increasing prices.
However, the flaring tensions between the two biggest economies in the world continued to raise worries regarding the cancellation of a significant trade deal. If the cancellation occurs, crude oil demand will be dampened.
On Tuesday, base metal prices on the London Metal Exchange(LME) ended positively due to the restarting of industrial activities in China.
However, the hedge funds are still reluctant to take long positions in industrial metals. This factor has kept the markets cautious. U.S-China tensions persisted as President Donald Trump continued to blame China for causing the pandemic. According to reports, China has halted all large scale purchases of U.S. farm products. The resulting stiff trade war can limit the rise in base metal prices.
Besides, increased protests, looting and violence in the U.S weighed on the market sentiments and limited any further increase in the price of base metals.
On Tuesday, LME Copper ended higher by 0.81 per cent to close at $5528.5 per tonne. Hopes of an economic recovery by China post-pandemic lent support to the red metal prices.
It is to be seen how world governments can tackle the critical problems of unemployment, hunger and starvation due to the recession-like conditions in many parts of the world. It is hoped that with the removal of lockdowns, the world will slowly return to a state of normalcy.
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