Gold up easing Bond yields while Oil extends its fall

Gold remains elevated while Oil prices plunged after the OPEC group called off a meeting without reaching an agreement on the supply scenario.
Gold
On Wednesday, Spot gold ended higher by 0.37 percent to close at $1803.4 per ounce. The bullion metal continues to edge higher on the back of retreating benchmark US Treasury Yield. Lower bond return reduces the opportunity cost of holding Gold; however, a stronger Dollar kept the prices in check.
The minutes of the US Federal Reserve policy meet last month indicated towards a sooner than expected tapering of the asset purchase program. Despite mounting inflation worries, a relatively higher unemployment figures still remained a major concern for the US Central bank.
Increase in the number of Delta variant COVID-19 cases ignited worries over extension of lockdown in major economies which might further derail the economic recovery. The wild spread of the virus clouded the bets on a paced economic revival which kept the safe haven Gold elevated.

Crude Oil
On Tuesday, WTI Crude prices fell about 1.6 percent to close at $72.2 per barrel while MCX Crude prices dipped over 1.9 percent to close at Rs.5392 per barrel. Oil continued to trend lower post no clarity by the OPEC group on the production stance in the months ahead.
Oil prices rose earlier in the week on bets of a tighter supply market in the near term as the Oil exporting group called off talks earlier this week after three days of meetings. OPEC group failed to reach an agreement to raise supply in order to meet rising global demand after Saudi Arabia, the de facto leader of the group, and UAE were unable to strike a deal.
Also, worries over tighter pandemic led curbs in Asia, Australia and Europe following the increase in the Delta variant cases further pressured on the prices.

Base Metals
Most Industrial metals traded lower on the LME traded higher in yesterday’s session. Base metals on the MCX also traded in line with the international prices with Nickel and Copper gaining th most.
After the successful first round of China’s State Reserve metal auction, China’s National Food and Strategic Reserves Administration announced to continue releasing inventories in the times ahead in an attempt to ease commodity prices.
The metal auction on 5th July’21, which offered 100,000 tonnes of Copper, Aluminium and Zinc, concluded on the first of the two days allotted for the sale.
Prospects of increase in global supply of the industrial metals and wild spread of the delta variant in major economies might turn investors cautious.
Copper
Yesterday, LME Copper ended higher by 1.54 percent to close at $9455.0 per tonne even after China vowed to increase metal sale in the upcoming auctions.

Mr. Prathamesh Mallya
AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd
8th July 2021