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Below are Views On Commodity Article 22 November 2021 By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel One Ltd 

Oil plummets on worries over excess supply.

 Gold

Spot Gold prices ended lower by 1 percent in the week gone by as a stronger Dollar amid expectations of a sooner than expected rate hike by US Central bank dented appeal for the yellow metal.

Rise in inflation levels signaled towards the possibility of an early hike in interest rates which would increase the opportunity cost of holding the non interest paying Gold.

Gold prices were further pressured as the Dollar strengthened reflecting bets over a rate hike and upbeat retail sales figures by US in October’21 despite high inflation levels.

However, growing inflation concerns kept Gold prices afloat as it is widely considered as a hedge against inflation.

Chances of a rate hike by the US FED might weigh on Gold prices; however, rising inflation and global uncertainties is expected to support the safe haven asset in the week ahead.

Retreating US Dollar and Treasury yields might levy some support for Gold in today’s session.

Crude Oil

Last week, WTI Crude plunged over 5.9 percent as worries over the recent spike in COVID-19 cases in Europe and expectations of release of crude reserves by major Oil consuming economies hampered market sentiments.

The fall in Oil prices came despite of the withdrawal from the US Crude inventories in the earlier week. As per reports from the International Energy Agency (IEA), U.S. oil inventories slipped by 2.1 million barrels, in the week ending on 12th November’21, against market expectations of a 1.4 million barrels build up.

Over supply concerns as some nations plan on releasing Oil reserves following the request by the US amid fresh virus outbreaks in Europe and rise in inflation levels might keep Oil under pressure in the week ahead.

Major economies moving towards releasing Oil reserves amid rise in covid19 cases in Europe might continue to weigh on Oil prices.

Base Metals

Most Industrial metals on the LME remained under pressure last week following the demand concerns arising from China. Disruptions in China’s property, construction and manufacturing segments (the major consumers of Base metals) pressured market sentiments.

The Dollar priced Industrial metals were further pressured as mounting Inflation woes increased expectation of a sooner than expected hike in interest rates by the US Federal Reserve which supported the US Dollar.

Liquidity concerns reflecting the debt worries in China’s property segment and chances of an early increase in interest rates undermined the outlook for the Base metal complex.

Aluminium prices found some support towards the end of the week as explosion at an Aluminium plant in China's Yunnan province ignited shortage concerns.

Signs of improving relations between US & China following the brief call between U.S. President Joe Biden and Chinese President Xi Jinping might support the Base metals complex in the weeks ahead.

However, appreciating US Dollar following bets over an early interest rate hike and signs of weakness in China’s economy are considerable headwinds for the entire pack.

Copper

Last week, MCX Copper slipped lower by 0.62 percent in line with the international market as a stronger Dollar and easing supply worries following the drop in coal prices pressured Copper prices.

Easing US Dollar might support the Dollar priced industrial metals after yesterday’s fall in today’s session. 

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