Friday, April 10, 2020

Gold continues to be under pressure on hopes of economic recovery, Crude Oil finds support from OPEC+ meeting

Mr. Prathamesh Mallya, Non Agri Commodities and Currencies, Angel Broking Ltd.

The Eurozone and China look to be on the recovery path, giving hope of an economic revival sooner than expected. The number of fresh COVID-19 patients has been on a decline in countries like Italy, Spain, and China, impacting the Gold prices negatively. At the same time, Crude oil prices are hinging on the hope that there would a consensus on production cuts between OPEC+ nations.
Spot Gold prices continued to decline on Wednesday as hopes of global economic recovery weighed on the investors’ sentiment towards the yellow metal. The decline in Gold prices was of 0.16 percent on Wednesday as it closed at $1645.8 per ounce. At the same time, the rise in the number of COVID-19 cases reported in the U.S. and in Asia except for China limited the downfall in the price of the bullion.
In the coming days, Gold prices will continue to be affected by the impact of stimulus packages announced by different governments across the world. The US has already announced a stimulus package worth $2 trillion to support the country’s economy that has been affected by COVID-19 pandemic. Eurozone and Japan have also announced an infusion of half a trillion Euros each to bring their economies back on track.

On Wednesday, spot Silver prices ended marginally higher by 0.131 percent to close at $15.0 per ounce whereas prices on the MCX ended lower by 0.82 percent to close at Rs.43139 per kg.
Crude Oil
Crude oil prices soared about 6.1 percent to close at $25.1 per barrel on Wednesday on the hopes of an agreement between OPEC and other major oil-producing countries on production cuts in the coming weeks. Crude oil prices had crashed after the OPEC+ meeting in early march delayed the decision on supply cuts and triggered a race for greater market share between Saudi Arabia and Russia.
However, the videoconference meeting between OPEC leaders and its allies which is due on April 9th is expected to be a success as all the members seem to be onboard to trim production in order to support crude oil prices. As per reports from the U.S. Energy Information Administration, U.S. crude stockpiles surged over 15 million barrels last week as refineries shut down around the nation and demand continues to fall due to the lethal virus outbreak.
Base Metals
On Wednesday, base metal prices on the London Metal Exchange ended negative except for Nickel which ended higher by 0.31 percent.  There are worries about weaker demand in the global economy due to the COVID-19 pandemic. Aluminum continues to be pressurized as plunging demand amid a surge in the inventory levels on the Shanghai Exchange and LME weigh on the light metal prices.
However, the announcement of the stimulus package from various economies, including the US, continues to support the prices of metals, limiting its decline.
Markets will cautiously wait for the release of minutes from the U.S. Federal Reserve's policy meeting. While aggressive stimulus measures might improve the demand outlook for industrial metals, but industrial activities are likely to remain subdued for many months to come, keeping a check on any substantial price hike.
Copper On Wednesday, LME Copper prices ended higher by 3.19 percent as fall in the number of COVID-19 patients in the Eurozone amid constant fall in the LME Copper inventory levels supported the leader metal prices

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