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Below are Views On Commodity Article 20th December 2021 By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel One Ltd 

Widening impact of the Omicron virus hamper sentiments

Gold

Last week, Spot Gold gained 0.6 percent as mounting inflation concerns, a weaker Dollar and retreating US Treasury yield helped the yellow metal end its four week long losing streak.

The US Federal Reserve stated that they would increase the speed of tapering the expansionary policy in the months ahead and scheduled three interest rate hikes by the end of 2022 following the progress in the US economy and increasing inflation levels.

However, the US Central bank kept the interest rates steady at 0 - 0.25 percent in the meet scheduled during the week. Rising inflation worries across borders boosted appeal for the yellow metal as it is widely considered as a hedge against inflation.

Depreciating US Dollar and widening impact of the Omicron virus on the global economy might continue supporting Gold in the week ahead. However, boost in the markets risk appetite following FED’s comments over the developments in US economy is expected to keep the prices check.

Worries over impact of the new Omicron virus on the global economic growth is expected to boost demand for the safe haven, Gold.

Crude Oil

WTI Crude prices slipped lower by 0.6 percent in the week gone as growing over supply concerns amid uncertainties over the impact of Omicron virus on the global fuel demand pressured sentiments.

Oil prices traded lower after the World Health Organization (WHO) stated that the COVID-19 vaccines might be less effective against the new Omicron variant. That was in line with the US International Energy Agency (IEA) comments stating that the global Oil demand might take a hit following the surge in Omicron cases.

However, depreciating US Dollar following the recent FOMC meet, improving risk appetite and a larger than expected withdrawal of US Crude stocks limited the losses for Crude.

As per reports from the International Energy Agency (IEA), US Crude inventories dipped over 4.6 billion barrels in the week ending on 10th December’21 while the markets expected a 2.1-billion-barrel drop.

Worries over fresh curbs following the surge in Covid19 cases has clouded the demand outlook for the global Oil market which might keep prices under pressure in the week ahead.

Uncertainties over the impact of the Omicron virus might keep Oil prices under pressure.

Base Metals

Most Industrial metals on the LME ended higher with Zinc and Aluminium posting the highest gains amongst the pack. Improved appeal for riskier assets amid a softer US Dollar underpinned the Base metal prices in the week gone by.

Also, expectation of increase in infrastructure investment by China in the times ahead and the PBOC infusing funds in the financial markets in order to support their economy further pushed the industrial metal prices higher.

Zinc prices soared across exchanges during the week after Belgium-based Nyrstar announced to shut its plant in France following high power prices. That, coupled with limited production in China following the curbs on heavily polluting industries ignited worries of tightness in the global markets

Tightening supply reflecting the power shortage concerns and improving markets appetite for riskier assets might continue support the Base metal prices in the week ahead.

Widening impact of the new Covid19 variant might hamper sentiments and weigh on the Base metal prices.

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