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Below are Views On Spot gold ended marginally lower by 0.07 percent to close at $1787.2 per ounce By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd

Appreciating Dollar amid widening impact of the virus 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 Tuesday, Spot gold ended marginally lower by 0.07 percent to close at $1787.2 per ounce. Increasing appeal for the Dollar as the safe haven asset following the wide spread of the pandemic made the Dollar priced Gold less attractive for other currency holders.

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.

Also, weaker than expected economic data from China in July’21 following the recent flooding and renewed pandemic led restrictions hinted towards slowdown in the economic recovery of the second largest economy further levying some support for the safe haven Gold.

Markets are expected to have a keen eye on the minutes of the US Federal Reserve's policy meet last month for hints on their stance in the months ahead.

 Escalating worries of further slowdown in the global economic recovery as many nations reimpose restrictions might continue to support Gold prices.  However, a stronger Dollar might keep Gold prices in check.

Crude Oil

On Tuesday, WTI Crude price ended lower by 1 percent to close at $66.6 per barrel as mounting worries over recovery in the global oil demand in wake of the Delta variant of the Covid19 virus continued to drag the prices lower.

Surge in the infected cases leading to renewed restrictions in major Oil consuming economies like Japan & China continued to undermine the demand outlook.

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

Prices remained under pressure last week as lower-than-expected fall in US Crude inventories and US prompting the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to increase Oil output kept the gains in check.

The International Energy Agency (IEA) voicing 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. Officials US Crude inventory data will be published later in the day.

Base Metals

On Tuesday, most base metals on the LME ended lower as a stronger Dollar coupled with bleak demand prospects from China 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.

In July’21, China’s Aluminium output was down for the third consecutive month following the stern power consumption norms in key producing regions. Another round of energy usage limitation imposed in China’s Yunnan province (accounts for 10 percent of China’s Aluminium output), Inner Mongolia, Guangxi, and Guizhou might keep the supply of Aluminium from China tight in the coming months.

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

Copper

LME Copper ended lower by 1.3 percent to close at $9442 per tonne as appreciating US Currency and slow growth in China’s industrial sector continued to pressure the red metal prices.

Industrial metal prices might remain under pressure as market analysts slashing their growth projections for China in the coming quarter might keep investors on the back foot.

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