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Below are Views On Commodity Article 9th December 2021 By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel One Ltd 

Increasing China’s imports supports sentiments 

Gold

On Wednesday, Spot Gold ended higher by 0.4 percent to close at $1782.1 per ounce as the Dollar Index eased ahead of the key US economic data which levied some support for the bullions.

Investors remained cautious as the focus shifted towards the developments in the US economy in order to anticipate the Federal Reserve's interest-rate hike timeline. The US CPI report due later this week is expected to influence the timeline of the Fed tapering its economic support. The next US Central Bank policy meet is scheduled on 14th & 15th of December’21.

Increasing bets towards tapering of the expansionary policy by the US Central bank and hike in interest rates has pushed Gold prices lower. Increase in Interest rate raises the opportunity cost of holding non-yielding Gold.

Also, easing worries over impact of the Omicron virus on the global economy further pressured the safe haven asset, Gold’s appeal.

Strengthening US Treasury yield and the Dollar might weigh on the bullion metals.

Crude Oil

On Wednesday, WTI Crude ended higher by 0.43 percent to close at $72.4 per barrel as markets shrugged off worries over the new Omicron Variant. The rally in Oil prices in the first two days of the week helped Oil recover from the massive losses witnessed last week.

Markets worries over the new variant of the Coronavirus eased after Reports suggested that the Omicron cases had only been showing mild symptoms and the impact might not be that severe supported market sentiments.

As per reports from the US Energy Information Administration, crude inventories were reported lower by 0.2 million barrels last week while the markets expected a fall of 1.5 million barrels.

The Organization of the Petroleum Exporting Countries and their allies, also known as OPEC+, stuck to its scheduled increase in production activities in the recent meet despite of the spike in Omicron virus cases. (to add 400,000 barrels per day in January 2022)

The Oil exporting group also stated that it would review its production policy if the demand for Crude dropped following the impact of the new variant of the covid19 virus. OPEC+ is scheduled to meet in the first week of January’22.

Delay in return of Iranian Crude in the markets, easing worries over the new variant of the covid19 virus might continue to support Oil prices in todays session.

Base Metals

Most Industrial metals on the MCX traded higherin line with the international markets as China’s manufacturing and construction industry found some momentum following the pull back in raw material prices and easing power usage norms.

 Also, China’s central bank vowing to cut the reserves requirement for Banks in an attempt to support economic growth and Base metals demand levied some support.

Mounting uncertainties across China’s property sector and worries over the ties between US & China had kept the Base metal prices under pressure in the past few weeks.

Copper

On Wednesday, LME Copper rose about 0.6 percent to close $9652.5 per tonne as mounting supply concerns from Peru and Increasing demand from China underpinned the red metal prices.

Las Bambas, one of Peru's largest copper mines, will shut down copper production by mid-December because of a road blockade. Las Bambas produces 400,000 tonnes of copper a year, or about 2% of the world's copper.

In November’21, China’s Copper purchases climbed higher by 24.3 percent at 510,402 tonnes, as easing of a power crunch boosted demand for the Base metals.

China’s central bank working towards supporting their economy, increasing China’s Imports and easing worries over the Omicron virus might levy some support to the industrial metal prices.

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