Home Markets Revival in global demand amid disrupted supply Continue to support Oil and Base metals

Revival in global demand amid disrupted supply Continue to support Oil and Base metals

by Prathamesh Mallya (AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd)
Oct 21, 2021
Revival in global demand amid disrupted supply Continue to support Oil and Base metals, Market, KonexioNetwork.com

Gold

 

On Wednesday, Spot gold ended higher by 0.73 percent to close at $1784.1 per ounce. The bullion metal extended gains from the earlier session as a softer Dollar supported the Dollar denominated Gold.


Also, increasing bets over the inflation not being a transitory element has been supportive for Gold as it is widely considered as a hedge against inflation and currency debasement.


Some of the US Federal Reserve officials stated that the US Central bank might soon begin with the withdrawal of economic support but it was too soon to hike interest rates which further supported Gold prices.


Expectation that the US Federal Reserve would begin with the tapering of the expansionary policy as soon as next month following the recent increase in US consumer prices kept prices in check.

 


Lower US Dollar and increasing inflation worries  is expected to support the Dollar priced Gold.

 

 

Crude Oil


On Wednesday, WTI Crude gained over 1 percent to close at $83.9 per barrel as depleting US Crude inventories amid increasing shortage concerns across the globe strengthened market sentiments.


As per reports from Energy Information Administration (EIA), US Crude inventories dipped by 431,000 barrels in the week ending on 15th October’21 against the market expectation of a 1.9 million barrel rise.


However, China moving towards easing coal prices and mounting inflation worries limited the gains for Crude Oil. Soaring coal and natural gas prices coupled with falling temperature in China is expected to keep the Oil market under supplied and prices elevated in the days ahead.


Also, weaker than expected US industrial activity figures and slowdown in China’s economy is expected to weigh on Crude prices. Uncertainties arising from major Oil consuming nations following the disrupted supply and virus outbreaks might put a pause on Oil rally.

 


Drop US Crude inventories and a softer US Dollar amid a tight supply market might continue to support Crude Oil prices.

 

 

Base Metals


On Wednesday, most Industrial metals on the LME & MCX traded higher on expectation of tighter supply reflecting the ongoing power crisis around the globe.


Increasing supply constraints and depleting inventories across exchanges has raised potential shortage concerns amid resumption in global economic activities which has led to the recent uptrend in the base metal’s spectrum.


Also, a weaker US Dollar made the Dollar denominated industrial metals more desirable for other currency holders.

 


Copper


On Wednesday, LME Copper ended higher by 0.35 percent to close at $10185.5 per tonne. Copper traded higher as potential supply threats and a softer US Dollar kept prices elevated.


Worries over disrupted supply from major producing nation Peru as community announced to start a protest at a prime mining road used by the Las Bambas copper mine following the failed negotiations which was supportive for Copper.