Gold ended flat whilst Oil gained on a supportive demand outlook

Uptick in the US Treasury yield continued to pressure Gold whereas Oil recovered on improving demand prospects. Markets might have a keen watch on the key US economic inflation data due on Friday.

Gold
In yesterday’s trading session, Spot gold ended flat closing at $1896.1 per ounce as the US Treasury yield edged higher, denting appeal for the non-yielding Gold.
Gold, the inflation hedge, was dragged lower after US Federal Reserve officials referred to the current price rally to be a temporary factor led by optimism over reopening of economies.
Also, a more than expected fall in the US new unemployment claims supported bets on a paced recovery in the US economy. Markets will have a keen watch on the US inflation data due later on Friday.
However, an accommodative stance by the US FED and increasing virus cases in Indian levied some support to the safe haven asset, Gold.
Crude Oil
In yesterday’s trading session, WTI Crude gained about 1 percent to close at $66.9 per barrel as supportive US economic data overshadowed the worries of low demand from India and buoyed Oil prices lower.
More than expected fall in the US unemployment claims, bets on solid demand from major economies like US & Europe, depleting US Crude inventories continued to support sentiments. As per reports from the Energy Information Administration (EIA), US Crude inventories dipped by 1.7 million barrels last week which further supported Oil prices.
Markets also kept a keen watch on the developments over the nuclear deal between US & Iran for cues on entry of Iranian Oil in the global markets.
Investors also wait for the upcoming OPEC meeting scheduled on 1st June’21 for hints on their production stance in the months ahead.

Base Metals

Base metals traded higher as bleak prospects of further monetary policy tightening by the PBOC supported market sentiments.
China’s Industrial profits witnessed a slow growth in April’21 following the strict power consumption norms and high commodity prices. Chinese Industrial firms’ profits stood at 768.63 billion yuan ($120.22 billion) in April’21, lower by 93 percent from the earlier month, data as per National Bureau of Statistics (NBS).
Industrial profits were weighed down despite rising Chinese exports in the similar time frame. Revival in global economies amid stalled industrial activities in the virus struck nations boosted the demand for Chinese products in the overseas markets. As per China’s General Administration of Customs, Chinese exports in April’21 stood at $263.92 billion, 32.3 percent higher from the earlier month.
However, weakening of China’s industrial segment alleviated worries over further policy tightening by the People’s Bank of China (PBOC) which supported market sentiments.

Copper

LME Copper rose over 0.6 percent to close at $9979 per tonne as a softer greenback and mounting supply worries supported the red metal prices.
The negotiations between the workers at BHP’s Escondida & Spence Copper mine took a turn for worse after the Union representing workers rejected the latest offer made by the company and threatened of strike beginning from Thursday.
Spence produced 146700 tonnes of Copper in 2020 while the world’s largest Copper deposit, Escondida, production stood at 1.19 million tonnes in the similar time frame.
Also, signs of improvement in the Sino-American relations overshadowed the recent shortcomings in China industrial sector further supporting the industrial metal prices.

Mr. Prathamesh Mallya
AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd
28th May 2021