Prathamesh Mallya, Chief Analyst, Non Agri Commodities and Currencies, Angel Broking Ltd.
The main concern of world governments remained focused on how to balance the removal of lockdown measures, the restarting of economic activity, and also guarantee the safety of the people. Worries over a fresh wave of the coronavirus continued to threaten industries around the world.
Last week, Spot gold prices ended higher by 1.36 percent as interest rates remained low and fresh tensions erupted between the U.S and China. President Donald Trump pointed fingers at Chinese laboratories, blaming them for the spread of the virus and causing recession-like conditions in major economies. This boosted the prices of the yellow metal considerably.
Striking poor economic indicators and rising unemployment levels in the U.S. also raised real fears regarding a protracted recovery process that weighed on the market sentiments.
Last week, Spot silver prices surged over 7 percent to close at $16.6 per ounce. Prices on the MCX increased over 8.3 percent to close at Rs.46718.0 per kg.
Last week, WTI Crude prices surged over 24 percent after Saudi Arabia, the leader of OPEC, and its allies reported that it would raise its supply reductions by 1 million BPD to deal with the problem of oversupply.
The U.S Crude Inventory Levels decreased by 475,000 barrels against the expectation of a rise of 4.1 million barrels, which helped this massive rise in crude oil prices.
However, the sinister announcement by the U.S Federal Reserve Chairman Jerome Powell that the economic recovery period after coronavirus would be much extended in addition to substantial restrictions on air and road traffic limited any further rise in oil prices.
Last week, base metal prices on the London Metal Exchange (LME) ended negative as worries over a resurgent wave of the pandemic persisted.
Some support to the industrial metals was provided due to economical packages being unfurled by the People’s Bank of China and other central banks.
However, new cases of the virus in South Korea and China strengthened the expectation that quick removal of lockdown conditions would have devastating impacts on the world population. This led to the depressed demand for base metals.
LME Copper prices ended lower by 1.75 percent as fears of a stiff trade war breaking out between the U.S and China strengthened. The red metal prices decreased due to uncertainties prevailing over how to restart the world’s significant economies.
Governments around the world have to respond effectively to the high rates of unemployment and reports of starvation and distress in many countries. It is hoped that with the reducing number of cases in some parts of Europe, the economy will limp back to a state of normalcy.
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