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Published on 5/12/2022 11:20:13 AM | Source: Angel One Ltd

Commodity Article : Gold prices in the recently concluded week extended the winning streak Says Prathamesh Mallya, Angel One

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GOLD

Gold prices in the recently concluded week extended the winning streak, as it ended on a higher note.

Although the dollar rose as a result of hawkish comments made by US Federal Reserve officials who reaffirmed their commitment to fighting inflation, the bullion started the week on a shaky note.

The US dollar began to rebound after falling to a level that was nearly two weeks low, and a stronger greenback raises the cost of metals for holders of other currencies.

However, the bullion had a surge to two-week highs during the week as the US Federal Reserve Chair's speech reiterated predictions of smaller interest rate hikes. The dollar index headed for a weekly loss, a weaker greenback makes dollar-priced gold less expensive for overseas buyers.

Outlook: We expect gold to trade higher towards 54140 levels, a break of which could prompt the price to move higher to 54380 levels.

 

CRUDE

After witnessing a prolonged weakness, crude prices managed to conclude the previous week on a higher note, snapping the negative streak. Crude prices had slipped to 16-week lows versus a basket of currencies as data showed US consumer spending rose significantly in October.

The big consumer prospects for a revival in demand were sparked by the easing of COVID-19 restrictions in two important Chinese cities, Guangzhou and Chongqing. Prices increased as a result of tighter supply indicators, a declining currency, and hope for a resurgence in Chinese demand.

The week ending November 25 saw a nearly 13-million-barrel decline in US crude oil stockpiles, the largest decline since 2019. On the demand side, the anticipation of a recovery in China's oil consumption, the world's largest consumer, helped even more. While the market predicted that weekend protests might lead to a relaxation of travel restrictions, China recorded fewer COVID-19 illnesses.

Declining US crude inventories helped boost gains, but the upside was restrained as concerns that OPEC+ would stick with its existing output strategy at its upcoming meeting.

Outlook: Crude prices are likely to stay elevated on the back of relaxing covid restrictions in the Chinese cities, as demand for crude is likely to get back on track.

 

BASE METALS

The base metals pack continues to shine, as all the metals ended on a positive note, with LME Nickel being the top gainer. Investors predicted that slower US interest rate increases and a relaxation of China's COVID-19 limitations would enhance the outlook for demand, and copper prices added to gains from the previous week.

As a result, the prices increased to nearly two-week highs. A weaker dollar and forecasts that inflation has peaked and the pace of central bank rate rises will slow contributed to copper reaching its highest level in almost two weeks. Rate hikes obstruct economic expansion.

Metals priced in dollars are now more affordable for customers using foreign currencies as the currency dropped to its weakest level since June. Chinese policymakers made it simpler for real estate developers to get capital, helping a metals-intensive industry that is facing a debt crisis.

In an effort to increase GDP, the Chinese government has put in place a number of programs, but the recovery has been slowed down by COVID issues and a global economic downturn.

Outlook: We expect copper to trade higher towards 705 levels, a break of which could prompt the price to move higher to 716 levels.

 

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