By: Mr. Prathamesh Mallya, AVP - Research Non Agri Commodities and Currencies, Angel Broking Ltd.
The controversies surrounding the passing of the coronavirus relief bill to support the U.S. economy have kept investors’ eyes on the negotiations going on between Democratic leaders and White House Officials.
The sharp decline in private payrolls and lower employment in the manufacturing and service industry signals toward a
weaker labor market, and this has made investors remain cautious.
Gold
The gold prices on Thursday ended higher by 1.06 percent. The gold prices closed at $2039.4 per ounce. The boost in gold prices is assumed to be because of the bleak economic conditions that occurred due to coronavirus's resurgence.
Safe Haven, gold prices continue to stay elevated due to the hopes associated with the stimulus infusion by the U.S. due to the widening impact of COVID-19. A noticeable fall in the real returns during depreciating U.S. Dollar conditions is assumed to be another reason behind the shift of investments in the market towards the non-yielding golden asset.
Crude Oil
The WTI Crude prices ended lower on Thursday by 0.57 percent to close at $42.0 per barrel. The outlook for Crude oil remains clouded in the U.S. and many other nations due to the alarming rate of increase in COVID-19 cases. Crude oil's demand prospect remains pressurized due to the new stimulus deal of the U.S. on the widening impact of COVID-19.
Crude oil prices' downfall remains limited due to depleting U.S. inventory levels amidst weaker U.S. Dollar conditions. Also, crude oil prices remained underpinned due to the depreciating U.S. Dollar, which made the oil prices cheaper for other countries’ currency holders.
However, as per the reports of the Energy Information Administration, U.S. markets’ Crude oil inventory levels expectation (3 million barrels) in the last week of July of 2020 were exceeded to end up being 7.4 million barrels.
Base Metals
LME Base Metal prices on Thursday ended on a positive note. Base Metals prices were supported by the depreciating U.S. Dollar and the revival of manufacturing activities in the U.S., China, and the Eurozone. The prime reason behind the rise of industrial metal prices is the strengthening demand rate from one of the biggest metal consumers, China.
However, the outlook of Base Metals remains clouded as the demand of the metal from other countries remains depressing due to the bleak global economic conditions on the pandemic's widening impact.
The industrial metal prices also provide some support due to ramping up massive stimulus packages by policymakers and lowering interest rates to cushion economic fallout because of the pandemic.
Copper
LME Copper prices on Thursday ended lower by 0.25 percent to close at $6494.5 per tonne. The leader red metal prices were pushed lower due to the growing worries over the supply from key copper manufacturers like Chile and Peru. The demand prospects for industrial metals are weighed on due to the resurgence of the implacable coronavirus.
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