Crude oil, precious metals and base metals recovered on Friday from their recent lows on news of factories and retail showrooms in China gradually reopening after several weeks of lockdown following coronavirus (Covid-19) spread.
Gold for settlement in April on the Multi Commodity Exchange (MCX) of India jumped by 2 per cent to Rs 40,624 per 10 grams on Friday as traders booked took positions amid expectation of a further increase in prices on safe haven buying. May Silver gained 2.87 per cent to trade at Rs 36,109 a kg on MCX by the end of the day.
Crude oil futures jumped by 4.39 per cent to Rs 2,067 a barrel on hopes that the Organization of Petroleum Exporting Countries (Opec) will convene an emergency meeting of its members and pass a resolution to cut production to arrest a free fall in prices. Crude futures on MCX went up as high as 8 per cent, before retreating. Russia's refusal to cut crude oil output, sparked a price war with Opec, which pulled down prices by a massive 50 per cent since the Covid-19 was first reported in China this January.
"Sentiment looked positive on Friday with no new cases of Covid-19 reported in China's Wuhan region, the epicentre of the current pandemic. Factories and retail showrooms have started re-opening after weeks of lock down. While many Asian and European countries continue to remain in the grip of Covid-19 and lock down continues there, the partial recovery of trade in China has raised hopes of life gradually coming back on track, and a rebound in demand in the coming weeks," said Ajay Kedia, Director, Kedia Commodity.
Meanwhile, base metals on the benchmark London Metal Exchange (LME) moved up in tandem with their movement on the Shanghai commodity exchange. Reflecting a similar trend, April copper on the MCX added 1 per cent to Rs 378.3 a kg towards end of morning session on Friday. Zinc and lead futures gained between 1.5 per cent and 2.5 per cent following their movement on the LME.
Meanwhile, the decline in metal and energy prices was more pronounced on Indian exchanges than international ones due to a fall in the rupee against the dollar. The Indian currency slipped to a historic low of below 75 against the greenback on Friday.
In the spot market, standard gold price gained almost 2 per cent to close at Rs 41,169 per 10g in Zaveri Bazaar on Friday. Silver followed suit, adding over 5 per cent to close at Rs 37,140 a kg today, from Rs 35,220 a kg on Thursday. The recovery in bullion prices prompted traders and consumers to stay away from fresh orders amid the ongoing uncertainty in global economy.
Sentiment in commodities also improved due to the European Union's decision to extend monetary support to an economy faced with the prospects of defaults. While China now appears to be containing Covid-19 effectively, European Union and other countries are finding it difficult to extricate themselves from the grip of the pandemic.