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Below are Views On Commodity Article 30 November 2021 By Mr. Yash Sawant, Research Associate, Angel One

Easing fears of the new virus supported Oil & Base metals.

 Gold

On Monday, Spot Gold ended lower by 0.38 percent to close at $1785 per ounce. Gold prices extended the fall from the previous week as a appreciating Dollar dented appeal for the Dollar priced commodities.

However, the losses for Gold were capped as markets turned cautious with the Omicron coronavirus variant fears spreading across borders.

Markets risk appetite seems to have remained afloat as investors are trying to access the impact of the new variant of the coronavirus on the global economy.

Bets over an early hike in interest rates by the US central bank and a stronger Dollar kept the bullions price under pressure in the week gone by. U.S. President Joe Biden nominating Federal Reserve Chair Jerome Powell for a second four-year term increased expectations of a hawkish approach by the US central bank to tackle inflation. Higher interest rates increase the opportunity cost of holding the non interest paying Gold.

Gold found some support towards the end of last week as jitter over a new coronavirus variant discovered in South Africa, Botswana and Hong Kong sent a panic wave across markets boosting appeal for the safe haven.

Investors might remain cautious as the impact of the omicron virus on the global economy is still uncertain. Any severe impact on the economic growth is expected to shift the investors towards the safe haven, Gold.

Crude Oil

On Monday, WTI Crude rose over 2.6 percent to close at $70 per barrel. Crude prices revived from the massive losses last week as markets downplayed the worries over the new Omicron variant.

Fears over the recent spike in COVID-19 cases and release of crude reserves by major Oil consuming economies raised oversupply fears which hampered market sentiments and pushed Crude prices lower last week.

The Organization of the Petroleum Exporting Countries is scheduled to meet on 1st & 2nd Dec’21 which would throw some light on the groups production stance in the coming months.
 

Expectations that the OPEC would hold back its plans to add crude supply in January’22 in wake of the new variant of Covid19 virus might levy some for-Oil prices.

Base Metals

Industrial metals on the MCX traded higher on Monday in line with the international markets following easing worries over the new variant of the covid19 virus. While the WHO has voiced concerns over the "severe consequences" the new variant might cause, markets risk appetite remain elevated as fears over the impact of the new variant receded.

Base metal prices also found some support on the first trading day of the week as depleting LME Base metal inventories signalled towards a tight supply market.

Appreciating US Dollar following its safe haven appeal and expectation of a tighter monetary policy limited the gains for the Dollar priced Industrial metals.

Industrial metals remained under pressure throughout the week as higher interest rates could trim the liquidity in the markets. Global investors are expected to have a keen eye on the developments in the US economy for cues on Federal Reserve’s upcoming move.

Boost in markets risk appetite as the virus worries eased might continue to support the Base metals. However, a stronger US Dollar on expectation of a possible rate hike might pressure the Dollar denominated Industrial metals.

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