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Below are Quote On Spot gold prices plunged over 5 percent in the week gone by as the Dollar surged  By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd

Commodities remained under pressure as the US Dollar strengthened after the Federal Reserve hinted towards a potential shift in the monetary stance following the steady recovery in the US economy.

Gold

Spot gold prices plunged over 5 percent in the week gone by as the Dollar surged on prospects of a sooner than expected rate hike.  Even the US Treasury yield scaled higher after hawkish comments by the Federal Reserve in the recent policy meet which dented appeal for the non-interest-bearing Gold.

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.

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

Crude Oil

WTI Crude prices ended higher by 1 percent in the week gone by as a promising demand prospects and plummeting US Crude inventories overshadowed the firmer Dollar and kept the prices elevated

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 kept Oil prices afloat.

Oil also found some support as unlikely return of Iranian Oil in the global markets in times of increasing global fuel demand underpinned the prices.

Improving demand prospects following the steady recovery in global economies might continue to support Oil prices. However, prospects of tapering of the expansionary monetary policy might keep the prices in check in the coming days.

Oil gave up most of its gains as bets on a potential shift in the monetary stance under pinned the US Currency making the Dollar denominated Oil less desirable for other currency holders.

Base Metals

The Base metals complex headed towards a weekly decline across exchanges as China’s rigorous attempts to ease commodity prices and a stronger Dollar dragged the prices lower. China announced to release metals (copper, Aluminium and zinc) from its national reserves to nonferrous processing and manufacturing firms through a public auction which weighed on Investor sentiments. 

The US Currency strengthened after the Federal Reserve signalled towards a hawkish approach in its recent policy meeting adding to the downside for the Dollar priced industrial metals.

Premium on Aluminium shipments into Japan was set at $185 per tonne for July’21 to September’21, up about 25 percent than the premium of $148-149 a tonne set in April’21 to June’21. Plummeting LME Inventories, limited output from China following the stern energy consumption norms and soaring Japanese Aluminium premium might be supportive for the light metal prices.

Copper

LME Copper gained over 8 percent as Chinese officials vowing to strengthen the scrutiny of the commodities markets coupled with tapering of the expansionary policy hampered the red metal prices.

China’s plans to sell its reserve so as to ease the commodity prices coupled with a firmer Dollar might continue to pressure the Base metals in the week ahead.

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