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Below are Views On The US Federal Reserve continued to support the safe haven Gold whereas demand woes pressured Oil and Base metals By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd

Widening impact of the virus clouds the demand outlook

Widespread of the delta variant and reducing bets on any early tapering by the US Federal Reserve continued to support the safe haven Gold whereas demand woes pressured Oil and Base metals.

Gold

On Monday, Spot gold ended higher by 0.45 percent to close at $1787.2 per ounce. Spot Gold prices extended the gains from the past week as many nations imposing fresh curbs following the surge in new Delta variant Covid19 cases continued to support the safe have asset Gold.

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 supporting the safe haven Gold.

However, a firmer US Currency limited the gains for the Dollar denominated Gold.

Gold prices rose last week as easing worries over early tapering by the US Federal Reserve boosted appeal for the bullion metals. Slow growth in US consumer prices reduced bets on tightening of the monetary policy by US Central bank.

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.

Crude Oil

On Monday, WTI Crude price ended lower by 1.7 percent to close at $67.3 per barrel as worries over recovery in the global oil demand in wake of the Delta variant of the Covid19 virus weighed on the prices.

Increase in the infected cases in major Oil consuming economies like US & China clouded the demand outlook.

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 in the week ahead.

Base Metals

Most base metals on the LME ended lower on Monday as signs of weakness in China, the largest metal consuming economy, continued to remain a considerable headwind for the base metals complex. 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.

Also, high raw material cost and supply constraints amid fresh curbs following the increase in virus infected cases took a hit on the China’s industrial activities in July’21.

In July’21, China’s Aluminium output was down for the third consecutive month following the stern power consumption norms in key producing regions. As per the National Bureau of Statistics, China produced 3.26 million tonnes of primary Aluminium in July’21, down about 0.9 percent from June's 3.29 million tonnes.

Fresh round of energy consumption norms imposed by southern China's Yunan province (the Aluminium hub) and Guangxi region amid the recent floods in China’s major industrial region continued to pressure Aluminium’s supply chain.

Copper

LME Copper ended lower by 1.3 percent to close at $9442 per tonne as slow growth in China’s industrial sector continue 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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