( Mr.Prathamesh Mallya, Chief Analyst, Non Agri Commodities and Currencies, Angel Broking Ltd.)
Commodities prices continue to hover between hope and despair as the investors across the world look to balance their portfolios on the basis of response by the US government to control the spread of the Coronavirus pandemic. While the US FED has announced an economic package worth $2 trillion to support the industry, it had a mixed impact on the prices of Gold, Crude oil, Copper and base Metals.
GOLD: There was an uptick in the price of Spot gold prices on Wednesday, as they rose marginally higher by 0.2 percent to close at $1613 per ounce. Positivity in the bullion market was on account of stimulus measures announced by the US government that overpowered the fears that had gripped the markets due to the rise of Coronavirus pandemic. U.S. FED had announced its plans to infuse $2 trillion of stimulus package to counter the pandemic which rattled the financial markets. Markets expect that the robust stimulus plan by U.S. would ease down global worries.
The price of crude oil in the international market was also impacted positively due to the stimulus package announced by the US Federal Reserve. On Wednesday, the WTI Crude prices rose by 2 per cent to close at $24.5 per barrel. However, markets still remain pessimistic over recovery in the oil prices reflecting the Coronavirus breakout coupled with the surge in oil production by top producers like Russia and Saudi Arabia. Multiple nations have announced a lock down which has led to curtailment of the aviation sector and road transport, putting pressure on the demand for crude oil. The U.S. Crude inventory levels rose for the 9th consecutive week by1.6 million barrels as the Coronavirus pandemic continues to dampen the demand prospects for Crude.
On Wednesday, base metal prices on the London Metal Exchange were mixed with ‘Lead’ being the highest gainer amongst the pack. Industrial metals found some support after the U.S. Federal Reserve announced its plans to counter the coronavirus outbreak. However, the gains were limited as prolonged shutdown of industrial sectors around the globe might hamper the growth for industrial metals. The relentless Coronavirus which broke out from China has now reached the shores of 120 nations, creating panic in the markets which has led to a massive sell off in assets by investors. We believe that the impact of the pandemic might be much severe than expected and even the industrial activities will take longer to pick up after the lockdown is lifted.
On Wednesday, LME Copper prices rose around 0.8 per cent to close at $4855 per tonne as worries over supply side stress reflecting the pandemic coupled with aggressive stimulus plans announced by the U.S. supported the red metal prices. Ever since the outbreak of the Coronavirus pandemic, Copper concentrates processing charges in China fell for the first time.
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