Revival in the U.S. Dollar dented the appeal of Gold. However, it received some support from the increasing impact of the new COVID-19 strain. Crude ended higher after Saudi Arabia’s announcement to make additional production cuts. Base metals also extended gains with increased industrial activities in some of the world’s major economies. Nevertheless, the new wave of pandemic has casted a shadow on the near-term outlook.
Gold
Spot Gold plunged over 1.5% and closed at $918 per ounce as a stronger U.S Dollar dented the appeal for the yellow metal. Ease in the situation of Georgia’s senate elections further affected the safe haven, Gold.
The 10-year U.S. Treasury yield rose above 1% after 9 months, further pressuring the Gold prices. As the markets are betting on the Democrats winning the Georgian senate election, it is expected to improve the economic conditions.
However, increased worries over the new virus strain have dampened the economic conditions and market prospects. The UK has already entered a full lockdown to check the spread with similar expectation for other countries such as Japan and South Africa.
An additional stimulus is likely to extend some support to the yellow metal prices.
Crude Oil
WTI Crude surged by 1.4% and closed at $50.6 per barrel as Saudi Arabia promised to make additional output cuts. The nation announced cutting its production by one million barrels per day in February’20 and March’20, intending to keep the output steady amid new pandemic triggered restrictions. The development will most likely drive the oil prices higher.
As per the Energy Information Administration’s report, the U.S. crude inventory levels dropped by 8 million barrels during the last week of the year. It has also supported the oil market.
In contrast, the rising number of cases across the globe and strict restrictions in many nations dampened crude’s demand and capped the gains.
Depleting inventories and hopes of improved demand following additional stimulus aid by the U.S. might aid crude oil prices.
Base Metals
Most of the LME base metals ended in the green. Optimistic industrial data from the world’s major economies extended further support to base metal prices.
December’20 observed a positive demand outlook for base metals as factory activities gained momentum in major world economies. Strengthening industrial activities in the U.S., China, and the EU further added thrust to the trend.
Nickel prices surged after gains in steel while China’s coke futures also extended higher returns due to tighter supply.
LME Copper increased by 0.44% and closed at $8,037.5 per tonne due to decreasing inventory levels and steady industrial growth in China. Additional stimulus aid by the U.S. is likely to push the copper prices higher.