By: Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd.
Better than expected economic data on the US economy raised investor hopes, putting pressure on Gold prices. Other commodities also felt the pressure due to appreciating US dollar prices.
Gold
On Thursday, spot gold prices ended lower by 0.62 percent closing at $1930.5 per ounce as robust U.S. economic data raised hopes of a faster economic recovery undermining the appeal for the yellow metal. Expansion in U.S. factory activities and fall in the number of unemployment claims boosted hopes of a faster recovery from the pandemic slump. As per reports from the Institute for Supply Management (ISM), U.S. factory figures stood at 56 in August’20 up from 54.2 in July’20. U.S. factory activities posted its third consecutive monthly gain as orders for U.S. made goods surged. The losses for the yellow metal were limited as U.S. Federal Reserve’s officials signaled towards more stimulus measures in the coming months to help the economy get back on track.
Crude Oil
On Thursday, WTI Crude price fell around 0.34 percent to close at $41.4 per barrel as bleak demand prospects pressurized Oil prices. As per data from the Energy Information Administration (EIA), demand for U.S. gasoline and other Oil products dipped last week. Widening impact of the pandemic clouded the outlook for Crude as the global Oil market struggled to recover. The fall in Oil prices was despite a significant drop in the U.S. Crude inventory levels last week. U.S. Crude inventories plunged over 9.4 million barrels per day. Strengthening of U.S. & China’s manufacturing activities in August’20 and expectation of additional output cuts by Iraq in the coming months limited the losses for Crude Oil.
Base Metals
On Thursday, most Base metal prices on the LME ended lower as appreciating U.S. Dollar and a weaker U.S. labour market undermined the prices. However, the losses were limited as China’s factory activity grew at a steady pace after significant fall recorded in February’20. As per a private survey, China's manufacturing sector grew at its fastest in a decade last month. Surge in steel production considering the vast infrastructure development aimed to support the economy also levied some support for Nickel and Zinc prices. China’s Infrastructure focused stimulus packages and an evident recovery in the manufacturing and the service sector elevated the industrial metal prices since the downfall in the early months of 2020. Moreover, signs of improvement in demand from U.S. & Eurozone alos limited the downfall in base metal prices.
Copper
On Thursday, LME Copper prices ended lower by 2 percent to close at $6563.5 per kg as easing of supply worries over shadowed the depleting inventory levels and pushed the prices lower.
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