Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel One Ltd
Spot gold ended lower by 0.8 percent during the week as the Dollar strengthened ahead of the key US employment data (due late on 8th Oct i.e. Friday) which would hint towards US Federal Reserve’s timeline of tapering the monetary policy.
The US Dollar and Treasury yield scaled higher after the initial US weekly jobless claims slipped lower indicating towards developments in the US labor market.
Also, increasing Oil prices following bets over resumption in global economic activities boosted markets risk appetite which further pressured the safe haven Gold.
Gold might remain under pressure in the week ahead as any positive economic data set by US will increase bets towards a tighter policy and push the Dollar higher. FED planning on increasing interest has clouded the outlook for the safe haven Gold.
A steady US Dollar ahead of the payrolls report that is expected to provide clues on the Federal Reserve’s tapering timeline might keep markets cautious.
WTI Crude gained over 2.2 percent last week as mounting supply concerns following the resumption in global economies underpinned Oil prices.
Oil prices were pushed higher as OPEC planning to continue with the scheduled expansion in production activities and US Energy Department not willing to release Oil from the emergency crude reserves despite increasing fuel demand and tight supply.
The gains for Crude were capped as appreciation in the US Dollar made the Dollar denominated Oil less desirable for other currency holders.
Further limiting the profits for Oil was the second consecutive weekly build up in US Crude stocks. As per reports from the Energy Information Administration (EIA), US Crude inventories rose about 2.3 million barrels in the week ending on 1st October 2021.
Rising fuel demand given the recovery in economic activities amid tighter Oil supply and increasing natural gas prices might keep prices elevated in the week ahead.
Industrial metals traded higher on the LME & MCX during the week despite a stronger Dollar as depleting inventories across exchanges and revival in markets risk appetite supported sentiments.
The gains for Industrial metals were capped as worries over growth in China’s property sector following Evergrande’s debt troubles amid disrupted industrial activities hinted towards instability in the world’s largest metal consuming economy.
LME Copper ended higher by 1.2 percent last week reflecting the potential shortage worries arising from major Copper producers Peru.
Road blockade on a key mining route by an indigenous community in Peru’s Espinarwhich affects both, Antapaccay as well as Las Bambas copper mine (data from the ministry of energy and mines) ignited supply concerns.
Despite concerns in China’s property markets, industrial metals might continue to trade higher following resumption in global economic activities amid potential shortage concerns in the week ahead.
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