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

Spot Gold, Crude Oil, and Base metals ended lower during the past week amid the rising number of COVID-19 cases. Strengthening of the U.S. Dollar further led to the decline in gold prices and also weighed down the Crude Oil prices. The increasing tension between the U.S. and China further pressurized the industrial metal prices.

Gold : Spot gold ended lower by 4.2% amid the strengthening of the U.S. Dollar. Uncertainty over stimulus by the U.S. policymakers further dented the prices of the yellow metal.

The dollar was underpinned by projections of a paced economic recovery in the coming years by the U.S. Federal Reserve. Furthermore, an alarming increase in the COVID-19 cases in Europe and Britain further pushed the demand for Dollar-denominated Gold.

However, the fall in the gold prices was capped by dampened hopes of economic recovery due to the rising COVIDd-19 cases.

Gold prices are expected to be supported by an additional stimulus by the U.S. Federal and by political uncertainty following the presidential election debate. 

Crude Oil : WTI Crude ended lower by 2% amid the widening impact of the pandemic and an appreciating U.S. Dollar. A resumption of Oil capacities in Libya after months of pandemic led lockdown further weighed down the Crude Oil prices. It is expected that the resumption in the Libyan production would add over a million bpd to the global crude market.

According to the Energy Information Administration, the U.S. Crude inventories have depleted by 1.6 million barrels against an expectation of a 2.3 million barrel drop.

The fall in the inventory levels, bleak prospects of the economic recovery, and resurgence of the new COVID-19 cases might continue to weigh down the oil prices. 

Base Metals : Base metals on the LME ended in the red amid the rising COVID-19 infections. The prices of the industrial metals were further weighed down by a growing tension between the U.S. and China and an appreciating U.S. Dollar.

China’s industrial activities and retail sales increased in August’20 indicating economic recovery of the biggest metal consumer in the world, thereby limiting the fall in prices.

According to the General Administration of Customs, China’s imports of Aluminum and Aluminum products increased by 10% and stood at 429,464 tonnes in August’20.

The global Nickel market was dragged down to 8,900 tonnes in July’20 from 14,700 tonnes reported in June’20.

Copper - LME Copper ended lower by 4.2%. A strengthening Dollar made the red metal expensive for other currency holders. Satellite surveillance reflected resumption in the North American capacities indicating a revival in Global copper smelting activity in August’20. 

Rising demand for the red metal from China and hopes over additional stimulus aid by the U.S. might further support the industrial metal prices.

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