Prices of select base metals and energy rose on the back of hopes of a demand revival, on Wednesday, following expectations of further economic stimulus from China.
The Chinese government infused $250 billion last week to support the economy, which was hit by the coronavirus outbreak.
While crude oil price in international markets surged 1.5 per cent to trade at $58.20 a barrel, silver and gold prices jumped by 1 per cent (to $1,610 per ounce) and 0.5 per cent (to $18.37 per ounce), respectively, in the benchmark London spot market. At the Zaveri Bazaar here, standard gold in physical markets hit all-time high of ~41,400 per 10 grams and silver firmed up at ~47,600 a kg.
Started with the trade war between the US and China, followed by the political instability in West Asia and Brexit, and now the coronavirus pandemic in China, the global economic growth is at stake.
Consequently, leading progressive world economies have already started the process of economic stimulus. Japan, for example, has announced a ¥26-trillion ($239 billion) package to boost its economy and prevent recession. Now, analysts forecast China, India and other large economies to follow suit.
“Prices of sensitive commodities are up today, predominantly on expectations of economic stimulus being planned by the government of China.
While positive trade sentiment is building, economic stimulus will be negative for currency and thereby positive for gold, energy and some base metals,” said Naveen Mathur, Director at Anand Rathi Shares and Stockbrokers. Non-investment linked sensitive commodities including nickel, lead and aluminium on the benchmark London Metal Exchange, however, declined marginally.
On the MCX, crude oil futures for delivery in February jumped 1.78 per cent to ~3,764 a barrel.