The resumption of industrial activities aims at recovering global economic conditions amid de-escalation of tension between superpower nations, U.S. and China

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

The hopes of the people revolving around the COVID-19 vaccine trials have heightened recently because of the contributions of Russia. The economic conditions look promising, creating hope of a return to normalcy.

Gold
Spot gold ended higher by 2.15 per cent on Monday to close at $1985.5 per ounce as depreciating U.S. Dollar, and the retreating U.S. Treasury yields raised the appeal for the yellow metal.
Bleak economic figures which were posted by the Federal Reserve of New York also imposed some support for the yellow metal. The Business Conditions Index in the New York Fed’s Empire State dropped in August’20 from 17.2 to 3.7, which was recorded in July’20. Even the new orders jumped from 13.9 in July’20 to -1.7 in August’20.

Crude Oil
The WTI Crude prices on Monday ended higher by 2.1 per cent to close at $42.9 per barrel. The heightened price of crude oil in the market was the result of the rise in demand from China. And the prices of crude oil were also underpinned due to the output cuts agreed by OPEC’s compliance.
The gains of Crude were also limited due to the slashing of 2020 crude oil demand forecast earlier given by the International Energy Agency and the Organization of the Petroleum Exporting Countries. However, the prices of Crude might uplift due to the depreciating U.S. dollar value and the boost in demand from China.
The phase one trade deal review which was scheduled on 15th August was postponed due to the growing rift between China and the U.S. The delay was also initiated to provide more time to China to increase their purchases from the U.S. so that the tension between these two superpower nations can decrease.
As per the reports received from the U.S. oil shipbrokers, traders, and importers, the Chinese state-owned oil companies have booked tankers from August to September of 2020 for carrying 20 million barrels of U.S. crude.

Base Metals
The Base Metal prices on the LME ended positive on Monday, and the highest gainer in the market among the pack ended being Zinc. The demands supported the base metal prices because of the activities of Chinese factory expansion.
The prices of Nickel were elevated due to the 28% plunge in Nickel ore output by the Philippines in the first half of the year 2020. The demand of Philippine’s Nickel ore increased after the Indonesia ban earlier in 2020.

Copper
The LME Copper prices on Monday ended higher than 1.25 per cent to close at $6446 per tonne. The prices of copper were pushed higher due to the upbeat economic data posted by China and because of depleting inventories on LME. The copper inventories on LME plunged over its twelve years low to reach 110000 tonnes.