On Tuesday, WTI Crude closed 1.96% higher at $38.9 per barrel on the back of increasing demand from China and the resumption of economic activities across the globe. The oil prices have also been supported by OPEC and Russia’s decision of last week to cut output till July 2020. In April, OPEC had agreed to cut production by 9.7 million barrels per day in May-June to contain prices in the global supply glut.
The OPEC cartel, however, stated that it will not reduce production by an extra 1.18 million BPD in July 2020 as done in June. This has capped the gains for crude and continues to add pressure due to the possibility of a surge in the crude inventory increase. The apprehension around the second wave of coronavirus is also added to the uncertainty. Official U.S. crude inventory data will be published today and will guide the day’s trajectory.
Spot Gold prices also rallied by 1.16% and closed at $1,714 per ounce on Tuesday. Investors clutched onto gold as they expected U.S. Federal Reserve to undergo a dovish stance. It also alongside the expectation of further stimulus measures also depreciated U.S. Dollar and made it cheaper for other currency holders, thereby boosting its demand. In 2020, aggressive stimulus packages that a majority of central banks have driven supported gold prices, and now, as the recovery is expected to take longer than previously expected, more stimulus packages are awaited. This is making gold highly lucrative for global investors.
The Spot Silver also soared over 2.8% on Tuesday and closed at $17.9 per ounce. At MCX, silver surged by 1.76% with Rs. 48,185 per KG. The market is keenly awaiting the U.S. Central Bank’s meeting on stimulus packages and how have things panned out in the biggest economy across the globe.
On Tuesday, base metal prices on the LME ended positively except Nickel and Zinc. At MCX, Copper zoomed by 0.91%, Aluminum by 0.03%, and Lead by 0.68%. On the other hand, Nickel and Zinc traded 1.12% and 0.58% lower respectively. Industrial metal prices were pressurized after China’s manufacturing activities slowed down in May 2020. China’s manufacturing PMI number dropped to 50.6 in May’20 from 50.8 posted in the earlier month. However, the service and construction sector picked up which indicated an uneven recovery and weighed on the base metal prices.