BY: Prathamesh Mallya, Chief Analyst, Non-Agri Commodities and Currencies, Angel Broking Ltd.
Many nations have pushed forward to remove the lockdown related restrictions and restart economic activity to support their citizens. However, worries that a resurgent wave of the coronavirus might return in the winter months continued to persist and influenced market sentiments.
On Tuesday, Spot Gold prices ended higher by 0.36 to close at $1702.1 per ounce as the depreciating dollar supported the amount of the yellow metal.
The US FED has taken several crucial steps to deal with the conditions of mass unemployment and stagnant economic growth. There was an announcement to buy shares of ETFs that invest in bonds through its Secondary Market Corporate Credit Facility.
The tactical stimulus measures unfurled by several countries, including the U.S and China, may have been the reason behind ascending gold prices. Besides, President Trump encouraged the FED to drive interest rates into negative territory to improve the market prices and functioning.
On Tuesday, Spot Silver prices ended lower by 0.90 percent to close at $15.4 per ounce. Prices on the MCX ended lower by 0.41 percent to close at Rs. 43,054 per kg.
On Tuesday, WTI Crude oil prices surged over 6.7 percent to end at $25.8 per barrel after Saudi Arabia announced aggressive production and output cuts. They agreed to increase production cuts by 1 million barrels per day to push up the demand for crude oil. This factor was accentuated by the decision of the OPEC to undergo production cuts up to 9.7 million units per day in May and June of 2020.
However, worries over a fresh wave of coronavirus and restriction in air and road traffic limited further gains for Crude Oil.
On Tuesday, Base Metal prices on the London Metal Exchange(LME) depreciated as the coronavirus continued to create demand worries for industrial metals.
Positive trade data generated by China offered some relief to the prices, with China’s Central Bank, the People’s Bank of China (PBOC) unfurling detailed stimulus packages. This led to an ascent in prices compared to earlier trading sessions.
On Tuesday, London Metal Exchange(LME) Copper prices ended slightly lower by 0.01 percent as persisting worries over a deadlier upcoming wave of the pandemic continued to weigh on the red metal prices. It is hoped that with the slow removal of lockdown related conditions, economic activity will show signs of a return to normalcy. The massive unemployment and production cuts undertaken in factories and companies around the world have created a dire scenario that needs to be rectified soon by the world community.
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