Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel One Ltd
Spot Gold ended flat closing at $1749.9 per ounce as the Dollar remained elevated reflecting prospects of a hawkish approach by the US Central bank.
Gold remained under pressure last week despite an unchanged monetary policy by the US Federal Reserve, as projections of an earlier than expected withdrawal of the economic support dented appeal for the bullion metal.
US Federal Reserve officials stated that tightening of the monetary policy depends on the steady expansion in the US labor market. Investors are expected to have a keen eye on the US employment data for September’21 for more cues on the central bank's monetary policy shift.
Any positive economic data set by US is expected to increase bets towards withdrawal of the economic support by the Federal Reserve which might strengthen the Dollar and weigh on the Dollar priced bullions.
Appreciating Dollar and increasing US Treasury yield might weigh on the non-interest bearing Gold in today’s session.
On Monday, WTI Crude gained about 2 percent to close at $75.5 per barrel. Oi extended its gains from past week as increasing supply jitters amid prospects of increasing global demand pushed prices higher.
Easing impact of the pandemic leading to resumption economic activities in times of disrupted supply kept Oil prices elevated. Tighter supply from US and low production by some of the OPEC members kept the global Oil supply chain under pressure.
The US Crude stocks slipped to the lowest levels in almost three years in the earlier week which further supported market sentiments. As per reports from the EIA, US Crude inventories dipped by 3.5 million barrels in the week ending on 17th September’21.
Increasing Fuel demand amid low supply from US and some of OPEC members might continue supporting Oil prices.
On Monday, Industrial metals on the LME ended mixed as a stronger US Dollar and increasing energy usage limitations in China clouded the demand outlook for base metals. Tight coal supplies and toughening emission standards have driven the power shortages across China taking a hit on smelters and other operational facilities.
Output curbs on China’s stainless-steel mills have undermined sentiment in the nickel market as it consumes about Two-thirds of the total nickel consumption.
Further pressuring market sentiments were China’s plans to continue with the rare release of the metals from the state reserve in an attempt to ease the high prices.
In the fourth round of metal auctions, scheduled on 9th October 2021, the National Food and Strategic Reserves Administration will release 30,000 tonnes of copper, 50,000 tonnes of zinc and 70,000 tonnes of Aluminium taking the total amount of metal released in 2021 to 570,000 tonnes. China’s plans to release metals soon after the week-long public holiday from 1st to 7th Oct’21 amid bleak demand prospects might keep the markets cautious.
LME Copper gained about 0.32 percent as depleting LME Copper Inventories and record low Copper stocks in China kept the red metal prices elevated.
Bets over recovery in global demand amid increasing shortage worries might continue to support Industrial metals.