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Below are Views On Commodity Article 24 November 2021 By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel One Ltd 

Stronger US Dollar pressured Dollar denominated Commodities

Gold

On Tuesday, Spot Gold prices ended lower by 0.85 percent to close at $1789.7 per ounce. Gold continued to trade lower as the Dollar and US treasury yield gained strength on expectations of a sooner than expected rate hike by US Central bank.

Gold extended the fall from past week after U.S. President Joe Biden nominated Federal Reserve Chair Jerome Powell for a second four-year term which increased bets towards an early rate hike.

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.

However, the recent spike in the covid19 cases in Europe and worries of slowdown in China’s economy might levy some support for the safe haven asset, Gold in the week ahead.

A stronger US Dollar and bets over hike in interest rates might continue to keep Gold under pressure.

Crude Oil

On Tuesday, WTI Crude ended rose over 2.2 percent to close at $78.5 per barrel. Oil prices surged despite of the release of Crude reserves by US amid the recent spike in COVID-19 cases in Europe and a stronger US Dollar.

The US vowed to release 50 million barrels from the strategic reserve in an attempt to ease Oil prices after the OPEC+ refused to boost output.

The fall in Oil prices last week 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.

Official US Crude inventory & Natural Gas data are due later today.

Base Metals

On Tuesday, most Industrial metals on the LME remained under pressure as a stronger US Dollar reflecting bets over a sooner than expected rate hike undermined the outlook for the entire pack.

MCZ Zinc prices eased after a sharp uptrend in the latter half of yesterday’s session. Zinc prices surged earlier in the week after miner and commodity trader Glencore announced to halt its zinc sulphide operations in Italy for maintenance work.

That, coupled with disrupted supply from China following the stern environmental norms raised severe supply threats for Zinc, which is widely used for galvanization.

Indonesia continued to restrict the exports of Nickel ore despite of the lawsuit filed by European Union at the WTO. Indonesia banned Nickel ore exports since January 2020 in order to support the domestic manufacturers and processing units.

The supply of Nickel was further threatened as the major mining area in Southern Philippines entered the rainy season. Philippines is China’s the prime supplier of Nickel Ore. China’s Nickel ore imports dropped in the recent months following the disruptions in the Philippines.
Nickel prices might continue to find some support as many mining regions of Philippines witnessed rains.

Stronger US Dollar and bleak demand prospects might weigh on the industrial metal prices.

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