By Prathamesh Mallya, AVP - Research Non Agri Commodities and Currencies, Angel Broking Ltd.
A call for the normalization of working conditions was raised by all the major economies and corporations of the world. However, countries were wary of the resurgent cases of the virus and devoted resources towards finding out a potential vaccine and efficient treatments.
On Wednesday, Spot Gold prices ended higher by 0.88 percent, closing at $1810.1 per ounce as a surge in coronavirus cases boosted the demand for the yellow metal.
The pandemic has branched out to over 210 countries infecting over 11.89 million people around the globe. Pragmatic stimulus plans unfurled by major central banks worldwide, coupled with interest rates hovering near zero, have helped push up the gold prices. The decreasing cost of the U.S Dollar has made gold cheaper for other currency holders as well.
On Wednesday, WTI Crude ended lower by 0.02 percent, closing at $40.6 per barrel as worries over an extended economic recovery period weighed on market sentiments.
However, there was a steady rise in the demand for gasoline. According to reports from the Energy Information Administration (EIA), U.S. Gasoline stockpiles dipped over 4.8 barrels as demand soared by 8.8 million BPD. The OPEC countries agreed to continue the aggressive production cuts in the following months, which helped limit the downfall in crude oil prices.
Restrictions on air traffic and lockdowns being reimposed in many parts of the world also affected crude oil prices.
On Wednesday, the prices of base metals on the London Metal Exchange (LME) ended higher as an increase in demand was registered from the top metal consumer, China, amid severe supply distress worldwide.
In June '20, China's Zinc output fell by 8.3 percent (YOY), which is the lowest since February '20. Production dipped to 396,000 tonne, which is 11,000 tonnes lower than China's output in May '20.
The steady decrease in zinc output coupled with a shipment delay from the Red Dog miners in Alaska supported the zinc prices.
However, disagreements between the U.S and China escalated, with the U.S pointing fingers towards China for its failure to contain the coronavirus. This factor limited the increase in base metal prices.
On Wednesday, Copper prices on the London Metal Exchange(LME) ended higher by 0.71 percent to close at $6232 per tonne as mines were shut down in Chile, the world's largest copper producers. Prices surged due to an increase in demand from top metal consumers.
World governments have to join hands to tackle the problems of adequate sanitation, healthcare, education, poverty, and starvation. Such an effort will help the world economy move towards a degree of normalcy and prevent it from heading into a recession.