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Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd

Strengthening of the U.S. Dollar amid uncertainties over additional stimulus aid by the U.S. dented the Gold and Base metal prices in the previous session. Crude Oil prices ended higher on account of an increased demand from China. However, bleak demand prospects capped the gains.

Gold 

Gold declined by 1.6% and closed at $1890.8 per ounce as appreciating U.S. Dollar weighed down the Dollar-denominated Gold.

Uncertainty over the coronavirus relief bill led to the strengthening of the U.S. Dollar. Democrats were concerned after President Trump’s latest offer on the coronavirus relief fund. However, U.S. House Speaker Nancy Pelosi continued hopes for a possible deal.

A robust increase in China’s industrial activities in September’20 further pressurized the yellow metal prices. China’s improved industrial activities reflected increased overseas demand and prospects of a balanced economic recovery. A boost in investors’ risk appetite dented the appeal for safe haven, Gold.

International Monetary Fund expressed worries over the outlook for the emerging markets amid the alarming spread of the deadly virus which capped the losses for the yellow metal.

An appreciating Dollar might further weigh down the Gold prices.

Crude Oil

WTI Crude Oil gained 2% and closed at $40.2 per barrel as demand from China increased and overshadowed the recovery in U.S. Oil production activities.

China’s Crude Oil imports stood at 11.8 million barrels per day in September’20 reflecting an increase of 1.75% year-on-year as some of the cargos cleared customs.

Hurricane Delta that posed severe risk to the energy production in U.S.’s Gulf of Mexico eased over the weekend and limited the gains for Oil.

Resumption of Libya’s largest Sharara Oilfield is expected to increase the global Oil supply. However, bleak demand might continue to act as a headwind.

Furthermore, the resurgence of COVID-19 in world’s significant economies and worries over the reinforcement of the lockdown capped the gains for Crude. OPEC’s projection of a weaker recovery in global Oil demand further underpinned the prices. 

Base Metals 

Base metals on the LME ended lower amid deadlock over the new coronavirus relief fund by the U.S. Furthermore, strengthening of the U.S. Dollar undermined the strong trade data posted by China and pressurized the base metal prices.

China’s exports rose for the fourth consecutive month in September’20 by 9.9% as more economies resumed activities post the pandemic-triggered lockdown. Meanwhile, China’s imports rose by 13.2% in the similar time.

The European Union imposed tariffs from 30.4% to 48.0% on imports of Aluminium extrusions from China. The Union suspected China producers were charging unfairly low prices.

Copper

LME Copper ended lower by 0.68% and closed at $6692 per tonne amid appreciating U.S. Dollar and uncertainty over the additional coronavirus relief fund.

China’s import of unwrought Copper and Copper products stood 8.1% higher at 722,450 tonnes in September’20. 

Stronger U.S. Dollar and no concrete signs of additional stimulus aid by the U.S. might weigh on the industrial metal prices. However, signs of robust demand from China might extend some support.

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