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

Worries over the second wave of coronavirus supported Spot Gold prices, attracting investors towards the safe haven instrument. On the other hand, the alarming increase of virus also undermined the Crude Oil and Base metal prices. Furthermore, an appreciating U.S. Dollar might weigh down Gold and industrial metal prices. 

Gold

Gold ended higher by 1.6% amid increased hopes over further stimulus aid by the U.S. The rapid increase in COVID-19 cases worldwide further kept the prices elevated.

President Donald Trump called off the negotiations on more stimulus aid. He asked Congress to infuse $25 billion in new payroll assistance to U.S. passenger airlines. The payroll assistance was demanded to support thousands of workers to help maintain their jobs.

Expectations regarding additional coronavirus relief funds supported Gold - a hedge against inflation and currency debasement.

China’s industrial activities robustly increased in September’20. This reflected an improvement in the overseas demand that boosted the investors’ risk appetite and capped Gold’s gains.

However, an appreciating Dollar might weigh down Gold.

Crude Oil

WTI Crude surged by over 8.9% during the last week amid worries over reduced supply. Furthermore, the hopes of increased stimulus aid by the U.S. supported Oil prices.

A strike triggered by failed talks between the union and the Norwegian Oil and Gas Association led to the closure of Six Norwegian offshore oil and gas fields. The closure of the oil and gas fields supported the Crude Oil price.

Hurricane Delta rapidly approached the U.S. Gulf Coast, supported the Oil prices by forcing the energy companies to shut approximately 17% of the total U.S. Crude Output to avoid any damage. However, recovery in the U.S. Oil production amid reduced worries over the storm might weigh down Oil prices. U.S. inventory levels rose marginally by 501,000 barrels in the week ending 2nd October’20.

The resurgence of COVID-19 cases and reinforcement of the significant economies’ lockdown undermined Crude outlook. 

Base Metals

Base Metals on the LME ended in the green during the last week amid increased demand from China. Expectations of additional stimulus aid by the U.S. further underpinned the industrial metals.

Industrial metal prices were supported by a rapid increase in China’s industrial activities in September’20. China’s increased industrial activities reflected development in the overseas demand and stimulus-driven infrastructural growth.

However, metal prices were kept in check by rising worries over the second wave of coronavirus in the world’s major economies and China’s weeklong holidays.

Copper

Copper ended higher by 3.2% during the last week amid a stronger U.S. Dollar. The upcoming labor negotiations in Chilean mines with a combined capacity of 2.8 million tonnes underpinned the red metal prices.

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