IGI Logo

Below are Views On Commodity Article 05 January 2022 By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel One Ltd 

Gold

On Tuesday, Spot Gold rose over 0.7 percent to close at $1814.6 per ounce. Gold prices scaled higher as a weaker US Dollar and surge in the Omicron variant cases around the globe shifted investors towards the safe haven asset.

However, boost in markets risk appetite, increasing Oil prices and higher bond yields kept the gains for Gold in check.

In 2021, Gold recorded its first annual decline in three years as recovery in global economies and major central banks moving towards a hawkish approach shifted investors away from the safe haven asset.

Gold prices in the international markets have registered a fall of 6 percent while MCX futures have declined by around 4.5 percent in the year gone by.

Increasing bets towards an early rate hike by the US Federal Reserve might over shadow worries over the surge in virus infected cases across borders and pressure Gold in todays session.

Crude Oil

On Tuesday, WTI Crude climbed higher by 1.2 percent to close at $77 per barrel. Oil prices found fresh support following signs that the Omicron variant would have only a mild impact on global demand.

The Organization of the Petroleum Exporting Countries and allies agreed on continuing with the scheduled increase in output in the recent meet which hinted towards strengthening demand for fuel. The Oil exporting group will add supply by 400,000 barrels per day (bpd) from February 2022.

Oil prices rose over 50 percent in 2021 as the demand climbed back to the pre pandemic levels. Also, the deep production cuts imposed by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) helped remove the excess oil from the global markets which further supported prices.

OPEC+ sticking to its scheduled increase in production activities despite the Omicron situation hinted towards growing demand which might support prices in todays session.

However, surge in Omicron cases around the globe might keep prices in check.

Officials US Crude inventory data due later in the day.

Base Metals

Most Industrial on the LME ended higher as Imroving risk appetite, mounting supply concerns and a weaker Dollar underpinned the Dollar priced commodities.

Zinc and Aluminium continue to outrun its peers on the similar narrative from 2021, a disuprted supply chain. Concerns over a sustained period of high power prices following the energy crunch ahead of the colder weather pushed the Base metal prices higher.

That is inline with China’s unsettled supply change which has been a supportive element for the entire pack. China’s power shortage sitaution worsened after Indonesia, China's largest overseas supplier of the coal, banned exports for January’2022.

Industrial metals on the MCX ended the year with strong gains as the revival in global economies and tighter supplies over shadowed the signs of weakness in China’s economy in the latter half of the year.

Improvement in China’s industrial activities towards the end of 2021 amid disrupted supply might continue to support Base metals.

Above views are of the author and not of the website kindly read disclaimer