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Below are Views On Oil prices eased ahead of the OPEC meeting while Gold is expected to remain steady By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd

Oil prices eased ahead of the OPEC meeting while Gold is expected to remain steady.

 Investors might remain on the back foot ahead of key US economic data whereas weak demand from China might weigh on Oil and Industrial metals.

Gold

On Tuesday, Spot Gold ended higher by 0.18 percent to close at $1813.4 per ounce. The US Central bank announcing to keep the interest rates low and not providing any timeline on withdrawing the economic support continued to underpin the bullion metals.

The safe haven Gold was further supported as a slowdown in China’s economy, mounting geopolitical tension and the recent outbreaks of the new variant of Covid19 virus continued to hamper market sentiments.

However, US FED Chair Jerome Powell stated that there might be tapering of the bond purchases later this year which limited the gains for Crude.

Markets also remained cautious ahead of the U.S. employment figures for August’21 for cues on the labour market recovery and FED’s stance in the months ahead.

Gold prices are expected to remain under pressure ahead of the key US economic data for hints on US Federal Reserve’s approach in the days ahead.

Crude Oil

On Tuesday, WTI Crude ended lower by 1.03 percent to close at $68.5 per barrel. Oil prices eased post a solid rally ahead of OPEC’S meeting scheduled on 1st September’21 as US continued to urge the Oil producing group to increase output.

Also, slow growth in China’s industrial segment in August’21 and widening impact of the pandemic raised over supply concerns which further hampered market sentiments.

Oil prices surged since the past week on potential shortage worries and softer Dollar. The Ida hurricane heading towards the Gulf of Mexico forced the nearby energy companies to shut the production capacities in turn supporting Oil prices.

However, Oil refineries shutting down raised worries of low demand from the production capacities which comes in line with OPEC’s move to increase Oil output which added to the downside in Oil prices.

Global investors are expected to remain cautious ahead of OPEC’s meeting on 1st September’21.

Also, mounting pandemic worries and low demand from the Oil refineries in the Gulf of Mexico might continue to weigh on the market sentiments.

Official U.S. Energy Information Administration inventory data is due later today.

Base Metals

On Tuesday, most Industrial metals on the LME ended higher with Nickel and Aluminium gaining the most amongst the pack.

Low level of Nickel inventories across exchanges amid increasing demand, primarily from the stainless-steel sector, underpinned Nickel prices. Surge in demand for Stainless steel products following the resumption in global economies boosted appeal for Nickel.

However, China’s move to limit the stainless-steel production in order to sidestep any potential surplus and to comply with the power consumption norms might weigh on Nickel prices in the coming months.

 Aluminium prices continue to trade higher (YTD gains on LME & MCX: 29 percent) as stringent environmental curbs take a severe hit at the smelter operating rates raising worries of potential shortage.

Also, continuation of the accommodative stance by the US Federal Reserve continued to weigh on the US Currency which also supported the Dollar priced industrial metals.

Copper

On Tuesday, LME Copper ended higher by 1.2 percent to close at $9520 per tonne. Supply threats for Copper persist as union at BHP's Cerro Colorado copper mine in Chile which raised worries of a potential strike.

Supply worries from China and an accommodative stance by the US Federal Reserve might continue to support Industrial metals.

However, slower than expected growth in China’s industrial sector is expected to pressure the entire pack.

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