Oil soars 20% intra-day; gold remains lusterless amid coronavirus fear

Oil prices rose as much as 20 per cent intra-day on Thursday, recouping some losses from a sell-off that drove prices to near 20-year lows, even as base metals and gold contiued to remain under pressure because of economic uncertainty in view of the coronavirus pandemic.

Metal prices declined between 3 per cent and 6 per cent on the Multi Commodity Exchange (MCX), toeing global move as selling pressure. Gold and silver, too, dropped in the domestic market, as well as globally. 

On the other hand, Brent crude was up $3.56, or 14.31 per cent, to trade at $28.44 a barrel (11:37 pm IST), after plunging to $24.52 on Wednesday, its lowest since 2003.

Prices of industrial metals opened on Thursday weak and recovered towards early afternoon on news that the European Union would provide fresh monetary support to prevent the region's economy from a possible default. Continued selling pressure, margins call and profit booking, however, pulled down prices of industrial metals towards the end of the morning session on the MCX.

 While copper futures for delivery on March 31 declined the most, 6 per cent, to the lowest in several years at Rs 360 a kg, both mini contracts of lead and zinc fell by 3 per cent and 5 per cent, respectively.  On the benchmark London Metal Exchange (LME), base metals reported a decline of 8 per cent to $4,400 a tonne in the early trade as the massive selloff resumed. Copper prices on the Shanghai metal exchange declined 9 per cent. Analysts say that investors cut their positions across the board on panic over the coronavirus spread. Base metals dropped 15-20 per cent with most of them plunged to the lowest since October 2008.

 ''Base metals moved on the MCX in tandem with their prices on the benchmark London Metal Exchange. Also, industrial metals followed the movement of the equity markets. Overall sentiment remained weak in base metals because of the spread of coronavirus which poses uncertainty for the global economy," said Naveen Mathur, Director (commodities and currencies), Anand Rathi Share and Stockbrokers.

 Meanwhile, crude oil futures for delivery in March jumped by 4.14 per cent to Rs 1,686 a barrel. Gold and silver futures for near month delivery also declined 0.5 per cent and 1.5 per cent, respectively, to trade in the late afternoon at Rs 39,702 per 10g and Rs 34,435 a kg.

 Standard gold on the benchmark Zaveri Bazaar closed with a marginal decline to Rs 40,334 per 10g on Thursday as compared to Rs 40,375 per 10g the previous day. Similarly, the silver price reported a decline to close on Thursday at Rs 35,200 a kg, compared to Rs 35,515 a kg on Wednesday.

 "Overall selling pressure continues in base metals because of uncertainty in the global economy. With reports of more infected patients coming in, the situation is unlikely to improve unless the virus spread is contained," said Priyanka Jhaveri, assistant vice-president, Kotak Securities.