Negative Developments Spook Global Markets
Increasing supply concerns due to release of oil reserves following a request by the US amid fresh virus outbreaks in Europe and increase in inflation levels might keep oil under pressure
Being qualified as a ‘variant of concern’ by the World Health Organization’s technical advisory group, the new strain of corona virus has resulted in fresh travel restrictions around the globe.In the commodity markets, investors are worried about hits to demand as recoveries potentially face speed bumps. The commodities were seen trading in negative territory during the recent fortnight and the biggest hit was observed to be for oil prices. WTI crude oil rattled by 15.57 per cent whereas Brent crude oil declined heavily by 11.31 per cent. Oil slipped along with global equities markets on account of the fear that the variant Omicron could dampen economic growth and fuel demand.
"Gold traded lower as the dollar and the US’ treasury yield strengthened on expectations of rate hike by the US central bank. Gold also witnessed a fall after US President Joe Biden nominated Federal Reserve Chair Jerome Powell for a second four-year term which increased bets towards an early rate hike"
Britain and European countries have restricted travel from South Africa where the variant was detected to find out if the mutation is vaccine-resistant. Increasing supply concerns due Gold traded lower as the dollar and the US’ treasury yield strengthened on expectations of rate hike by the US central bank.
Gold also witnessed a fall after US President Joe Biden nominated Federal Reserve Chair Jerome Powell for a second four-year term which increased bets towards an early rate hike to release of oil reserves following a request by the US amid fresh virus outbreaks in Europe and increase in inflation levels might keep oil under pressure. On MCX, cotton and copper futures were squeezed by 2.22 per cent and 2.32 per cent, respectively. During the fortnight, most of the industrial metals were seen under pressure as a stronger USD reflecting bets over a sooner-than-expected rate hike undermined the outlook for the entire pack. Copper futures faced slowdown amid the decline in global prices.
However, the losses were somewhat curbed for MCX Copper futures due to weakness in Indian rupee. On the other hand, MCX Zinc descended by 3.01 per cent whereas MCX Aluminium recorded a decrease of 3.58 per cent. Among bullion, MCX Gold dipped 2.75 per cent during the fortnight whereas MCX Silver contracted 6.22 per cent. Gold traded lower as the dollar and the US’ treasury yield strengthened on expectations of rate hike by the US central bank. Gold also witnessed a fall after US President Joe Biden nominated Federal Reserve Chair Jerome Powell for a second four-year term which increased bets towards an early rate hike.