Prathamesh Mallya, Chief Analyst, Non Agri Commodities and Currencies, Angel Broking Ltd.
The major economies around the world are expecting a slow return to normalcy and renewal of production and manufacturing bases. However, the fears of a more substantial wave of coronavirus returning in the winter months loomed over discussions of breaking away from stagnant, recession-like conditions.
Last week, Spot Gold prices ended higher by 1.2 percent as feeble economic data from the most significant economies supported the growth of gold prices.
The pandemic weighed heavily on the U.S economy, with the total number of unemployed people rising to nearly 33 million since 21 March 2020. Surveys from economies around the world show that the recovery period post lockdown may be extended beyond expectations.
The recovery in oil prices and the removal of pandemic-related measures limited the increase in the cost of Gold. The improving U.S Dollar made Gold exceedingly expensive for other currency holders, limiting the rise in the yellow metal prices.
Last week, Spot Silver prices ended higher by 2.86 percent to close at $15.5 per ounce. Prices on the MCX ended higher by 5.6 percent to close at Rs. 43,293 per kg.
Last week, crude oil prices soared over 20 percent, supported by aggressive production cuts by the Organization of the Petroleum Exporting countries. The Organization reduced its production by 9.7 million barrels per day from 1 May 2020.
Saudi Arabia slashed crude oil exports to a massive ten-year low and raised the Official Selling Price (OSP) for Crude oil. However, the restrictions on air and road traffic depressed any further rise in crude oil prices, since the share of these industries is very significant.
Last week, Base Metals on the London Metal Exchange (LME) ended on an ascending note amid removal of lockdowns, which had been pulling down the economy. However, significant tensions surrounding the U.S- China relations persisted, with the U.S blaming Chinese laboratories for spreading the virus.
China’s imports of crude oil and base metals in April surged from previously reported levels, indicating an improvement in the demand for commodities in the second biggest economy of the world.
According to the International Aluminium Institute, the global output increased over 2.1 percent in the first three months of 2020. The persisting problem of oversupply dampened the rise in aluminum prices.
London Metal Exchange Copper prices ended higher by 3.2 percent due to positive trade generated by China. However, the easing of restrictions on significant mines around the world, including Peru, raised worries of oversupply.
With a more positive outlook on trade being developed with the easing of lockdowns, it is expected that the economy will bounce back soon, and the vast number of unemployed people will get some respite.
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