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Below are Views On Spot Gold prices slipped below the 1800 level as the Dollar and the US Treasury yield strengthened By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd

Strengthening of the US Currency weighed on the Dollar priced commodities.

Gold                  

On Tuesday, Spot Gold ended lower by 1.6 percent to close at $1794.1 per ounce. Spot Gold prices slipped below the 1800 level as the Dollar and the US Treasury yield strengthened.

The US Treasury yield rose to the highest levels in over a month which increased the opportunity cost of holding the precious metal whereas the Dollar hovered near its highest level in a week.

The bullion metal remained elevated in the earlier session as expectation of a delay in the tapering of the expansionary policy by the US Federal Reserve kept the Dollar under pressure.

However, signs of evident slowdown in China’s economy, mounting geopolitical tension and the recent outbreaks of the new variant of Covid19 virus might continue to levy some support for the safe haven Gold.

Stronger Dollar and revival in the US Treasury yield might continue to keep Gold prices under pressure.

Crude Oil

On Tuesday, WTI Crude prices ended lower by 1.4 percent to close at $68.4 per barrel whereas Oil prices on the MCX ended lower by 0.42 percent to close at Rs.5013 per barrel.

Oil Prices remained under pressure as delay in resumption of operations in the U.S. Gulf of Mexico following the massive hurricane, Ida. About 79 percent of the Oil producing capacity remained offline as on Tuesday. The Gulf’s offshore wells account for about 17 percent of the US oil output.

That, coupled with strengthening of the US Currency weighed on the Dollar priced Commodities like Crude.

Also, slow growth in China’s economy, widening impact of the pandemic amid OPEC’s plan to increase output raised worries of excess of Crude in the global markets.

 Mounting pandemic worries, slowdown in China and Saudi’s price cuts might continue to weigh on Oil prices.
 

Base Metals

On Tuesday, most Industrial metals on the LME ended lower with Copper losing the most amongst the pack. Revival in the US Dollar after remaining under pressure following the accommodative approach by the US FED in the past week weighed on the greenback denominated industrial metals.

Moreover, signs of evident slowdown in China’s economy continued to weigh on market sentiments. China’s private survey stated that their Service sector slipped into contraction in August’21 as renewed restrictions following the widespread of Covid-19 Delta variant hampered economic activities. In August’21, Caixin services Purchasing Managers' Index (PMI) came down to 46.7 from 54.9 in July’21, slipping below the 50 level which is believed to separates development from contraction. That, coupled with slowdown in China’s industrial sector further hinted towards slowdown in the largest metal consuming economy.

The private sector survey focuses on the smaller and medium sized firms in China. While China has successfully contained the virus outbreak, an evident slowdown in their economy might continue to remain a considerable headwind for the industrial metal prices.

Copper

On Tuesday, LME Copper ended lower by 1.06 percent as a stronger Dollar and bleak demand prospects from China pressured the red metal prices.

Worries over slowdown in China’s economy and a stronger Dollar  might continue to remain weigh on the base metals spectrum.

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