"Daily Commodity Article" by Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities, and Currencies, Angel One Ltd
Gold prices post ending the previous week on a higher note, began the following week on a slightly weaker bias, giving up some of the gains.
On the other hand, gold prices went up during the course of the week, eventually rising to two-week highs as a result of the dollar index's weakening and a decline in treasury yields.
Expectations that the US Fed will likely commence reducing the pace of rising interest rates in light of the dismal economic data reported during the week was another tailwind that kept the prices high.
The pullback in the dollar index, which saw the greenback slipped to one-month lows made the yellow metal more affordable to holders of other currencies.
Outlook: We expect gold to trade lower towards 49980 levels, a break of which could prompt the price to move lower to 49800 levels.
Crude prices post taking a beating in the previous week witnessed a bounce back, as they ended with gains of nearly 4 percent.
US oil exports were one factor that kept prices higher, and a lower dollar also contributed because oil traded in other currencies becomes more affordable for holders of other currencies when the dollar depreciates.
The embargo on Russian crude imports by Europe, which is anticipated to take effect next month, as well as Russian shippers from the global shipping insurance market also contributed to the price increases.
Last but not least, the fourth consecutive month of negative manufacturing data emphasizes the indications that the economy is slowing down in the face of high inflation and rising interest rates.
Outlook: We expect crude to trade lower towards 7090 levels, a break of which could prompt the price to move lower to 6980 levels.
Metals like lead and aluminum only managed to end higher, as the base metals group continues to see a mixed set of action.
After hopes that the US Federal Reserve might slow the pace of rate increases, the metals did move higher. The gloomy US economic figures this week increased expectations that the Federal Reserve will relax monetary policy, limiting economic harm and boosting commodity demand.
As a result, the dollar eventually fell, making commodities more affordable for holders of other currencies. Gains were however limited as a result of an increase in coronavirus cases in China, which raised questions about the pace of the largest consumer nation's economic growth.
Additionally, the Yuan dropped to its lowest level against the dollar since 2008, increasing the price of products purchased in dollars by Chinese consumers.
Outlook: We expect copper to trade lower towards 644 levels, a break of which could prompt the price to move lower to 634 levels.
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