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Published on 21/09/2022 10:53:49 AM | Source: Angel One Ltd

Commodity Article : We expect gold to trade lower towards 48740 levels by Mr Prathamesh Mallya, Angel One Ltd

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GOLD

On Tuesday, gold prices ended nearly 1 percent lower, closing at 1663.1$ per ounce. The pullback in the bullion's price continues, with the dollar and Treasury yields firming and investors being cautious ahead of the widely anticipated significant interest rate hike by the U.S. Federal Reserve on Wednesday, the price of gold is continued to decline.

Other central banks are anticipated to continue tightening monetary policy in the face of rising inflation while the Fed raises interest rates.

While the US two-year yield touched an almost 15-year high, the dollar maintained steady near a two-decade high, increasing the price of bullion for holders of other currencies. Bullion's appeal is typically weakened by high-interest rates because they raise the opportunity cost of owning the asset.

Outlook: We expect gold to trade lower towards 48740 levels, a break of which could prompt the price to move lower to 48320 levels.

 

CRUDE

Crude prices after extending the weakness to yet another week, witnessed a bounce back on Monday, with NYMEX managing to end on a higher note.

Tuesday saw a more than 1% decline in crude prices as long-term prolonged weakness persisted. The benchmark crude indices, NYMEX and Brent, both declined by 1.16 and 1.49 percent.

As investors prepared for another aggressive interest rate hike from the US Federal Reserve and worried that it might lead to a recession and a drop in oil demand, crude oil prices extended their losses from the previous session.

The dollar has strengthened as a result of higher rates, which neared a two-decade high on Tuesday, making oil more expensive for holders of other currencies.

The fact that OPEC+ is currently producing 3.58 million barrels per day less than its targets, or approximately 3.5% of world demand, highlights the oil market's limited supply even while recession fears keep prices down.

Outlook: We expect crude to trade lower towards 6630 levels, a break of which could prompt the price to move lower to 6490 levels.

 

 

BASE METALS

Weakness in the industrial metals continues, however, on Tuesday, the metals pack witnessed a mixed session with Copper and Nickel ending on a higher note on the LME, whereas all the metals ended on a negative note on the MCX, except for Nickel.

In anticipation of the U.S. Federal Reserve's interest-rate announcement on Wednesday and rising stocks in London Metal Exchange (LME) licensed warehouses and a strong dollar put pressure on copper prices on Tuesday.

In comparison to a basket of other major currencies, the dollar is maintaining its strength near two-decade highs as investors prepare for another aggressive hike in interest rates by the U.S. Federal Reserve.

A higher dollar increases the cost of dollar-priced commodities for holders of other currencies, which could reduce demand.

Outlook: We expect copper to trade lower towards 638 levels, a break of which could prompt the price to move lower to 628 levels.

 

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