By Prathamesh Mallya, AVP - Research Non Agri Commodities and Currencies, Angel Broking Ltd
The focus of governments across the world remained on dealing with the escalating pandemic situation, and at the same time, stopping the world economy from heading into a recession. The ominous threats surrounding the deadly second wave of the virus persisted, and countries sought to ramp up potential vaccine trials.
Gold
On Monday, Spot Gold prices ended higher by 0.24 percent closing at $1802.7 per ounce as coronavirus cases continued to increase rapidly in the U.S and other parts of the world. Worries over an extended economic recovery period pushed investors towards the safe-haven asset, Gold.
The Coronavirus breakout has killed over half a million people around the globe in the past seven months. In many places, lockdowns were imposed again, which pushed up the price of the yellow metal.
However, the increasing price of the U.S Dollar may make Gold more expensive for other currency holders and limit the increase in the cost.
Crude Oil
On Monday, WTI Crude prices ended lower by 1.11 percent to close at $40.1 per barrel as demand worries were raised due to an alarming increase in tensions surrounding the pandemic.
Aggressive production cuts were continued by the OPEC and its allies which lent some hope to the revival of crude prices. OPEC is expected to reduce the production cuts by 2 million to 7.7 million BPD after witnessing a recovery in demand for Crude. However, restrictions on air traffic continued to persist and weighed on market sentiments.
Base Metals
On Monday, base metal prices on the London Metal Exchange(LME) ended higher with Zinc being the highest gainer amongst the pack as central banks around the world unfurled pragmatic stimulus plans. Chinese banks continued to boost credit in the economy to counter the disastrous economic situation.
According to information published by the People's Bank of China (PBOC), Chinese banks extended new loans up to 1.81 trillion Yuan (approx. $258.29 billion) in June '20. This is an increase from the 1.48 trillion Yuan given in May '20.
Copper
On Monday, LME Copper ended higher by 2.48 percent to close $6571.0 per tonne as there is the fear of supply distress due to the closing down of mining operations in the major export and production countries like Chile. Meanwhile, increasing infusions and demand from the top metal consumer, China, helped in boosting market sentiments.
It remains to be seen how efficiently leaders around the world can tackle the problems of mass testing, social distancing, poverty, and starvation. If governments across the world could come up with a joint effort to control the spread of the virus, the economy and healthcare systems should head to a degree of normalcy.
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