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Below are Views On Gold whilst larger than expected withdrawal in the US crude inventories underpin Oil prices By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd

Increase in US treasury yield weighed on Gold whilst larger than expected withdrawal in the US crude inventories underpin Oil prices.

Gold

On Wednesday, Spot Gold ended lower by 0.65 percent to close at $1792.6 per ounce. Spot gold scaled lower as the US treasury yield climbed higher increasing the opportunity cost of holding the bullion metal.

Also, steady growth in the US manufacturing activities despite the increase in the virus infected cases and disrupted supply following the hurricane Ida further underpinned market sentiments.

However, renewed restrictions across nations following the wide spread of the pandemic and slowdown in China limited the fall in the safe haven asset Gold.

Markets are expected to remain cautious ahead of the US Federal Reserve policy meet as slower than expected growth in the US Consumer prices clouded the prospects of tapering of the asset purchase program. the Federal Open Market Committee meet is scheduled on 21st & 22nd September’21.

Uncertainties over the US central banks stance in the months ahead is expected to keep the market cautious and Gold prices steady.

Crude Oil

On Wednesday, WTI Crude ended marginally higher by 0.01 percent to close at $70.5 per barrel as depleting US Crude inventories pushed the prices higher.

As per reports from the Energy Information Administration (EIA), US Crude inventories slipped over 6.4 million barrels surpassing the market expectation of a 3.5-million-barrel drop. The withdrawal of US Crude stocks comes in line with limited supply of from the refineries in the the U.S. Gulf region following the Hurricane Ida.

Soon after the Ida Hurricane, another storm (Nicholas) headed towards the US Gulf of Mexico further threating the supply of Oil from US. As on Monday, over 40 percent of the US Gulf’s Oil and gas production remained offline after 2 weeks of the hurricane Ida hit the US Gulf Coast.

Also, the IEA expecting the demand for fuel to recover in the months ahead further supported market sentiments.

Bets over recovery in Oil demand in the months ahead and depleting US Crude inventories is expected to support Oil prices. However, slow growth in China’s economy and widening impact of the pandemic might be a headwind for Crude prices.

Base Metals

On Wednesday, Industrial metals traded higher on the MCX on line with the international market prices as the Dollar weakened.

Lower-than-expected U.S. inflation figures hinted towards possible delay in withdrawal of the economic support by the US Federal Reserve which weighed on the Dollar.

Aluminium prices continued to trade higher on worries of disrupted demand from China. In August’21, China’s Aluminium production was down for the fourth consecutive month as increased power usage limitations in major smelting regions took a hit on the operational activities.

However, slow expansion in China’s factory and retail activity in August following the fresh outbreaks of the new variant of coronavirus and supply disruptions might be set back for the entire complex.

Copper

On Wednesday, LME Copper ended higher by 1.96 percent to close at $9627 per tonne as fading expectation of early tapering by the US FED and low output from China underpinned the red metal prices.

Despite the global uncertainties and bleak demand from China, Aluminium prices might continue to trade higher following the increased production curbs in major producer China.

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