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Below are Views On Spot gold ended lower by 0.41 percent to close at $1780.2 per ounce By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd

Appreciating Dollar amid widening impact of the virus continues to weighs on commodities

Increasing demand for the US Currency as a safe haven dented appeal for the Dollar priced commodities and dragged prices lower.

Gold

On Thursday, Spot gold ended lower by 0.41 percent to close at $1780.2 per ounce. Rising bets on tapering of the monetary policy by US Federal Reserve and an appreciating Dollar pushed Gold prices lower.

The minutes of the US FED policy meet held in July’21 hinted towards a tighter economic policy despite the slow recovery in the US labor market which clouded the outlook for the bullion metals.

However, the recent fall in new US unemployment claims supported market sentiments which further weighed on Gold.

Increasing appeal for the US Currency as the safe haven asset following the wide spread of the pandemic made the Dollar priced Gold less attractive for other currency holders. Even the Dollar index, which gauges the strength of the US Dollar rose about 0.5 percent.

Losses for Gold were limited as the US benchmark 10-year Treasury yields continued to trend lower which decreases the opportunity cost of holding the bullion metal.

 Appreciating US Dollar might outpace worries over of slowdown in the global economic recovery and continue dragging prices lower.

Crude Oil

On Thursday, WTI Crude price ended lower by 2.70 percent to close at $63.7 per barrel as escalating concerns over global oil demand in wake of the Delta variant of the Covid19 virus amid a stronger US Dollar continued to drag the prices lower.

Surge in the infected cases leading to renewed restrictions in major Oil consuming economies like Japan & China and increasing travel curbs ignited worries over weaker demand for Oil.

Also, slower than expected growth in industrial sectors, falling daily Crude processing, high level of inventories and lower profits in China hampered market sentiments.

Even the bigger than expected drop in the US Crude inventories last week failed to support Oil prices. As per the US Energy Information Administration – EIA, Crude inventories fell over 3.2 million barrels in the week ending on 13th August’21; however, gasoline stocks rose modestly in the similar time frame.

Appreciating US Dollar coupled with worries over recovery in the global oil demand in wake of the Delta variant of the Covid19 virus might continue to weigh on Oil prices in the week ahead.

Base Metals

On Thursday, base metals on the LME ended lower as a stronger Dollar, bleak demand prospects from China and worries over tapering by the US FED continued to pressure the entire pack.

Surge in new Covid19 variant cases and severe floods in prime industrial regions of China led to slow growth in China factory activities hinting towards slowdown in the economic recovery.

The fall in LME Aluminium prices was limited as steady withdrawals of Aluminium inventories from the LME monitored warehouse further signalled towards a tighter supply of the light metal. (LME Aluminium inventories are down over 30 percent since March’21.)

Copper

LME Copper ended lower by 1.64 percent to close at $8894 per tonne as appreciating US Currency and slow growth in China’s industrial sector continued to pressure the red metal prices.

MCX Copper and other industrial metal prices trade lower on Thursday in line with the international market prices as the recent slowdown in China’s economy and rising COVID-19 cases weighed on market sentiments.

Industrial metal prices might remain under pressure as sow growth in China and signs of tighter monetary policy by US FED is expected to dent the demand for base metals.

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