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

The continuous rise in the number of coronavirus cases shows bleak signs of economic recovery across the globe. The escalating U.S.-China tension and recovery in the U.S. Dollar limit crude oil and base metal prices. However, Gold manages to trade positive and attracts investors amid rising concerns over economic recovery.

Spot Gold traded higher by 0.11% and closed at $1930.9 per tonne amid rising tensions between the U.S. and China, the world’s biggest economies. The continuous rise in the number of coronavirus cases across the globe dents the hopes of economic recovery anytime sooner, especially among the investors, thus shifting them towards the safe haven, Gold.

The yellow metal became expensive for other currency holders owing to a recovery in the U.S. Dollar and encouraging U.S. employment data. However, officials of the U.S. Federal Reserve pointed towards a lower interest rate environment and stimulus measures for economic recovery in the coming months.

ECB’s monetary policy, which is due later this week, continues to attract investors who are eagerly waiting for the policymaker’s stance on the rising Euro.
Rising concerns regarding global economic recovery make the yellow metal attractive among investors, which is expected to trade higher on MCX today.

Crude Oil
WTI Crude declined by 7.5% and closed at $36.8 per barrel amid demand concerns triggered by the global pandemic. The appreciating U.S. Dollar continues to weigh-down the crude oil prices. The global oil market struggles to recover amid the economic slump driven by the rising number of coronavirus infections worldwide. Crude oil is expected to trade lower on MCX today.

Crude oil prices further plunged after the world’s biggest crude oil exporter, Saudi Arabia, reduced the Official Selling Price (OSP) to Asia for October 2020. Moreover, U.S. companies’ ramp up drilling to find new oil supplies is further weighing down the crude oil prices.

OPEC and its allies have scheduled a meeting on 17Th September to review the current oil market scenario. The crude oil prices are being pushed down by the appreciating Dollar, reduced global demand, and slower economic recovery.

Base Metals
Base metals ended lower on the LME, whereas LME Copper traded higher by 1.18% and ended at $6789.0 per tonne. LME Copper inventory dipped to a 15 year low, further limiting the decline in the Copper prices. The increasing tensions between the U.S. and China and worries over global economic recovery weighed down the industrial metal and copper prices. Copper is expected to trade sideways on MCX in today’s session.
The outlook for industrial metals was clouded as the U.S. president pointed towards ending all ties with China after the U.S. elections scheduled in November 2020.
China’s exports strengthened for the third consecutive month and supported the base metal prices. The country’s Aluminum imports, on the other hand, stood at 391,297 tonnes, which was the highest monthly total in over a decade.

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