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Below are Quote On Spot gold prices continued to crash for the second consecutive day falling below the $1800 mark  By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd

The US Dollar soared after the US Federal Reserve turned hawkish making the Dollar priced commodities less desirable for other currency holders.

Gold

In Yesterday’s trading session, Spot Gold plunged over 2 percent to close at $1773 per ounce. Spot gold prices continued to crash for the second consecutive day falling below the $1800 mark as the US central bank pointed towards a hawkish approach.

As per market expectations, the US Federal Reserve hinting a gradual tapering of the monetary policy gave strength to the US Currency in turn making the Dollar priced metal less attractive for other currency holders. Even the US treasury yield soared increasing the opportunity cost of holding the non interest bearing Gold.

However, the US Federal Reserve officials vowed to continue supporting the labor market.

The US FED also increased its inflation projections for 2021 to 3.5%, exceeding the central bank’s target of 2%. Prospects of increasing inflation in the coming months might be supportive for Gold which is widely considered as an inflation hedge.

Crude Oil

On Thursday, WTI Crude ended lower by 1.5 percent closing at $71 per barrel. Hints of a hawkish approach by the US Central bank in the recent policy meet gave strength to the Dollar which seems to have pause Crude Oil’s bullish spree.

Oil prices retreated from a multiyear high despite bets on increasing global Oil consumption, of depleting US Crude inventories and bleak chances of revival of Iranian Oil after the Dollar surged on signs of a sooner than expected rate hikes.

As per reports from the Energy Information Administration, US Crude stocks dipped by 7.4 million barrels last week signaling towards a prompt recovery in the refining utilization. Depleting US Oil inventories and reopening of major economies following a paced vaccine distribution continues to point towards a favorable outlook for the Oil market.

Base Metals

Base metals on the LME as well as MCX witnessed a significant fall as stronger US Dollar and China’s move to increase scrutiny of their commodities markets hampered the industrial metals.

The base metals complex was further pressured after reports stated that China will release metals (copper, aluminium and zinc) from its national reserves which would increase supply and eventually ease the commodity prices. 

In May’21, China’s primary Aluminium production slipped by 0.8 percent in comparison to April’21. As per the National Bureau of Statistics, China’s Aluminium production came up to 3.32 million tonnes in May’21.

The fall in output came in line with the power consumption limitations in major Aluminium producing regions like the smelting hub of Yunnan (accounts for about 10 percent of China’s Aluminium output) and Baotou in Inner Mongolia.

Copper

LME Copper prices plummeted over 3.6 percent to close at $9315.5 per tonne while Copper on the MCX ended lower by 3.4 percent to close at Rs.697 per kg. Copper prices traded lower as China’s attempt to restrict any prices increase and a firmer Dollar dented appeal for the red metal.

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