(Mr. Prathamesh Mallya, Chief Analyst Non Agri Commodities and Currencies, Angel Broking Ltd.)
Coronavirus has now spread to nearly all countries across the globe. Till now, there have been over 700,000 cases of the deadly virus and more than 33,000 deaths. In India, despite the lockdown, the number of cases has now crossed the 1,000-mark with 29 deaths. Obviously, the impact of coronavirus has had a deep impact on the entire market. Here is the outlook of non-agri commodities for this week.
Gold prices surged over 8 percent last week on the back of the stimulus announced by the US government that raised hopes of economic recovery. U.S. Fed had announced a $2 trillion package to limit the economic impact of the Coronavirus pandemic. However, as the U.S. jobless claims hit a record-high, U.S. Dollar traded lower and supported the bullion metal prices. The depreciation in dollar increased the gold prices along with the hopes of a robust stimulus and concerted measures. The gains were eroded after investors liquidated their holdings into cash as we observed a massive selloff in the market. This week, we expect gold prices to head higher towards Rs. 45000/10 gms.
The lockdowns have taken a toll on all base metal prices as the industrial activities across the globe come to a virtual halt. Last week, we saw base metal prices on the LME getting mixed results with Aluminum being the highest loser in terms of prices. LME Copper prices ended marginally higher by 0.2 percent as worries over supply side stress reflecting the pandemic coupled with aggressive stimulus plans announced by U.S. supported the red metal prices.It is expected that the base metal prices will dip further as it might take longer for them to pick up prices following the lockdowns. Yet, the expectations of a recovery are also there as most nations have taken effective measures against the deadly virus to sustain the economic activity. This week, we expect Copper prices to trade lower at around Rs. 390/Kg.
WTI crude prices surged marginally last week by 0.7 percent on the back of rigorous stimulus measures taken by the major central banks. These measures had eased the concerns around the crude demand. Crude prices also found some support after Oil refineries braced for deeper output cuts reflecting the fall in demand for Crude globally. However, the ongoing production war between major Oil producers, Russia and Saudi Arabia, and the fading demand limited the uptrend. The Coronavirus has killed over 33,000 people to date and the imposed lockdowns have led to the curtailment of aviation and road transport across the world. This has dealt the biggest blow to the demand of crude oil in international markets. Further, the U.S. Crude inventory levels rose for the 9th consecutive week by 1.6 million barrels, something which has further capped the gains for Crude. This week, we expect oil prices to trade lower towards Rs. 1600-mark.
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