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Below are Views On Oil and Gold prices remain steady while industrial metals traded lower On Wednesday By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd

Oil and Gold prices remain steady while industrial metals traded lower On Wednesday.

 Slow expansion in China’s industrial sector clouded the demand outlook for Base metals & Oil. Also, OPEC’s plan to boost output in the months ahead amid widening impact of the pandemic further pressured Oil prices.

Gold

On Wednesday, Spot Gold ended marginally higher by 0.01 percent to close at $1813.7 per ounce. The safe haven Gold continued to remained afloat as an accommodative stance by the US Federal Reserve and signs of slowdown in China’s economy supported the prices.

However, the US FED Chair Jerome Powell stated that there might be some tapering of the bond purchases later this year which limited the gains for Gold. Investors turned cautious ahead of the key US economic data which capped the gains for the Bullion metal.

The US Central bank announcing to keep the interest rates low and not providing any timeline on withdrawing the economic supported underpinned Gold prices in the earlier sessions.

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.

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. However, the private survey showed that US employment growth was slower than expected which might levy some support.

Crude Oil

On Wednesday, WTI Crude rose over 0.13 percent to close at $68.6 per barrel. Oil prices remained elevated despite the slowdown in China’s economy and widespread of the virus as a larger than expected withdrawal in the US Crude inventories supported market sentiments.

A per reports from the Energy Information Administration, US Crude inventories dipped about 7.2 million barrel  surpassing the market expectation of 2.5 million barrels drop.

Oil prices were pressured as OPEC and its allies vowed to continue releasing Oil as planned (adding 400,000 barrels per day (bpd) each month to the market) in yesterday’s meeting despite of a gloomy demand outlook.

Also, US Oil refineries shutting down following the Hurricane raised worries of low demand from the production capacities which comes in line with OPEC’s move to increase Oil output which further capped the gains for Crude.

Mounting pandemic worries, low demand from the Oil refineries in the Gulf of Mexico and slowdown in China amid OPEC’s plan to boost output might continue to weigh on the market sentiments.

Base Metals

On Wednesday, most Industrial metals on the LME ended lower Copper posting the highest losses amongst the pack. China's Caixin Manufacturing Purchasing Managers Index slid into contraction in August’21. Covid-19 led restrictions, increasing energy usage limitations and high raw material prices took a hit on China’s industrial sector.

 China’s private survey showed that the Manufacturing PMI dipped below the 50 level to 49.2 last month. The 50 mark is believed to separates development from contraction.

 The slowdown raised expectation of furthermore stimulus support by China in an attempt to support their economy.

 However, China’s official manufacturing Purchasing Manager's Index (PMI) came down to 50.1 in August’21, data as per the National Bureau of Statistics. Signs of slowdown in the world’s largest metal consuming economy pressured the base metal prices.

Copper

On Wednesday, LME Copper ended lower by 1.94 percent to close at $9335.5 per tonne. Slowdown in China’s economy over shadowed the mounting supply threats for Copper and pushed the prices lower.

Slower than expected growth in China’s industrial sector is expected to continue pressure the entire pack.

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