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Below are Views On A dovish approach by the US Federal Reserve underpins Commodities By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd

Oil prices extends following a spike in the US Crude inventories whilst Industrial metals feel the pressure from the soaring virus infected cases around the globe.

Gold

On Wednesday, Spot Gold ended marginally higher by 0.08 percent to close at $1811.4 per ounce. The bullion metal prices scaled higher as the US currency eased earlier in yesterday’s session making the Dollar denominated Gold cheaper for other currency holders.

However, the yellow metal gave up some of its gains made earlier in the day as the Institute for Supply Management (ISM) US non-manufacturing activity figures surged to 64.1 in July’21 its record highest levels which supported market sentiments.

The yellow metal prices were further pressured as the top US Federal Reserve officials signaling towards tapering of their expansionary policy later in the year.

Global investors waited cautiously for the US employment data due later in the week for cues on the US Federal Reserve’s stance in the months ahead.

Gold prices remained elevated in the past week the US Central Bank kept interest rates unchanged and didn’t give any fixed timeline on tapering of its expansionary approach in wake of the delta variant of the virus and a weaker labor market.

US FED officials signalling towards possibility of early tapering amid a stronger Dollar might weigh on the bullion metal prices.

Crude Oil

On Wednesday, WTI Crude ended lower by 3.4 percent to close at $68.2 per barrel. Oil prices continued to trade lower extending the fall from the earlier sessions as increasing US Crude inventories amid rising cases of the Delta variant of the Covid19 virus clouded the outlook for the global Oil market.

As per reports from the Energy Information Administration, US Crude inventory data rose by 3.6 million barrels in the week ending on 30th July’21 against the market expectation of 3.2-million-barrel drop. While the US Crude stocks witnessed an unexpected spike, the US while gasoline inventories plunged by 5.3 million barrels.

Crude Oil remained under pressure as worries over slow growth in China’s industrial sector amid OPEC increasing their Oil output which ignited over supply worries in the global markets and dragged the prices lower.

Mounting geopolitical tension in the Middle east might levy some support for Oil in todays’ session. However, widespread of the pandemic and increasing US Crude inventories is expected to keep the prices in check.

Base Metals

Industrial metals on the LME ended lower on Wednesday as widening impact of the delta variant of the Covid19 virus coupled with slow growth in the industrial activities in US & China weighed on market sentiments.

However, better than expected China service sector figures indicated towards a sustained recovery in the world’s largest metal consuming economy which levied some support for the industrial metal prices.

Also, hopes of additional stimulus measures by China considering the severe floods and rains and the resurgence of the delta variant of the coronavirus further limited the fall in the Base metal prices.

Copper

LME Copper ended lower by 1.64 percent as widespread of the virus undermined market sentiments. Also, the US Currency strengthened later in yesterdays session making the Dollar denominated base metal less desirable for other currency holders.

Slow growth in US & China’s industrial sector, concerns over increasing infected cases around the globe and bets on a sooner than expected tapering by the US FED might continue to weigh on industrial metal prices.

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