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Below are Views On The Covid19 virus and fresh restrictions imposed in many nations across the globe limited the fall in Gold prices By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd

A dovish approach by the US Federal Reserve underpins Commodities

Optimism infused by the upbeat economic data reported by US supported Oil and industrial metals prices in yesterday’s session

Gold

On Thursday, Spot Gold ended lower by 0.4 percent to close at $1804 per ounce. Upbeat economic data from US increased fresh bets on some early tapering by the US Federal Reserve which pressured Gold prices.

Any signs of a tighter monetary policy by the US central bank will underpin the US treasury yield and the Dollar in turn denting appeal for the non interest-bearing Gold. Markets cautiously await for the US employment data due later on Friday for cues on FED’s approach in the months ahead.

However, widening impact of the new variant of the Covid19 virus and fresh restrictions imposed in many nations across the globe limited the fall in Gold prices. Worries over further slowdown in the global economic recovery amid low Oil prices levied some support for the safe haven.

Increase in the number of US FED officials voicing the possibility of an early tapering amid a stronger Dollar might continue to weigh on the bullion metal prices.

Crude Oil

On Thursday, WTI Crude rose about 1.4 percent to close at $69.1 per barrel. Crude Oil reversed some of its losses made earlier in the week as increasing tension from the Middle east overshadowed the recent hike in US Crude inventories and pushed the prices higher.

The last weeks drone attacks have increased differences between Iran and the world powers decreasing the chances of a nuclear deal and waving off the sanctions from Iran which supported Oil prices. Oil prices traded lower in the earlier sessions as a sudden increasing US Crude inventories and rising cases of the Delta variant of the Covid19 virus clouded the outlook for the global Oil market.

As per reports from the Energy Information Administration, US Crude inventory data rose by 3.6 million barrels in the week ending on 30th July’21 against the market expectation of 3.2-million-barrel drop.

While mounting geopolitical tension from the Middle east might continue to levy some support for Oil prices; widespread of the pandemic and increasing US Crude inventories is expected to keep the prices in check.

Base Metals

Most industrial metals on the LME traded higher after sign on upswing in the US economy infused optimism in the global markets. Decrease in the number of unemployment benefits and growing imports improved markets risk appetite in turn supporting the base metal prices.

Also, better than expected China’s service sector figures and hopes of additional stimulus measures by China considering the severe floods and rains and the resurgence of the delta variant of the coronavirus further underpinned the Base metal prices.

However, the US Currency strengthened post the upbeat economic data and bets on a sooner than expected tapering by the US FED making the Dollar denominated base metal less desirable for other currency holders.

Copper

LME Copper ended higher by 0.3 percent to close at $9491.5 per tonne as uptick in global equities following the solid economic number reported by US outpaced worries of weak demand from China.

Further supporting Copper prices were the mounting supply worries arising from the Escondida mine located in Chile. The union called its member to prepare for a strike at the world’s largest copper reserve due to slow advancement in the negotiations.

Stronger Dollar, concerns over increasing infected cases around the globe and bets on a sooner than expected tapering by the US FED might weigh on industrial metal prices.

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