By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd
Countries around the world are focused on creating potential vaccines and efficacious treatments to treat their citizens. Meanwhile, they plan to boost the economy and push it towards a degree of normalcy. The threat of the second wave of the pandemic continues to hover over the world.
On Wednesday, Spot Gold prices ended higher by 0.21 percent, closing at $1811.3 per ounce as tensions surrounding the economy increased in the wake of a steady surge in coronavirus cases. Fears over a protracted and extended economic recovery period made investors take shelter in the safe-haven asset, Gold.
U.S President Donald Trump called off essential trade deals with China and threatened to take concrete action over the archaic security laws imposed by China in Hong Kong. In addition to this, rising tensions in the South China Sea precipitated the geopolitical scenario and increased the cost of the yellow metal.
However, the steady increase in vaccine trials for coronavirus on humans and hopes of a global recovery limited the increase in prices.
On Wednesday, WTI Crude prices ended higher by 2.26 percent to close at $41.2 per barrel as there was a significant dip in U.S Crude Oil Inventories. As per the Energy Information Administration, U.S. Crude inventories dropped by 7.5 million barrels last week. The aggressive production cuts undertaken by all the major oil-exporting nations added to the steady improvement in oil prices.
However, the gains for Crude were capped after the OPEC and its allies planned to reduce the production cuts by 2 million to 7.7 million BPD from August’20 after witnessing a recovery in demand for Crude.
Worries over reimposing pandemic-related lockdowns and continued restrictions on air traffic limited the increase in Crude costs.
On Wednesday, base metal costs on the London Metal Exchange (LME) ended lower, with Zinc being the highest loser as the steady increase in coronavirus cases coupled with tensions surrounding the U.S-China relations dampened the outlook for industrial metals.
However, pragmatic stimulus and infusion plans started by central banks around the world, including the People’s Bank of China(PBOC) lent some support to the metal prices. New loans were announced to stop the economy from heading into a recession.
On Wednesday, LME Copper ended lower by 1.73 percent to close $6386.0 per tonne as severe supply distress from major export nations combined with a renewed U.S-China rivalry pressurized market costs.
World leaders have to efficiently tackle the problems of starvation, mass testing, and unemployment. It is hoped that countries will join hands and put up a global fight against the virus.