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Published on 29/07/2022 10:26:34 AM | Source: Angel One Ltd

Gold climbs higher as the dollar weakens - Angel One

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Below is Commodity Article by Mr. Saish Sandeep Sawant Dessai, Research Associate- Base Metals, Angel One Ltd

GOLD

The up move witnessed in gold in the previous session was extended further, as prices ended Thursday's session on a higher note. Spot gold ended with gains of over 1 percent, ending at 1755.5$ per ounce.

Even though the recent up-move seen in the yellow metal, the prices are poised to end on a lower note for the fourth straight month,as a result of the strong U.S. dollar and aggressive monetary policies from leading central banks continued to hamper demand for bullion.

The U.S. economy unexpectedly shrank in the second quarter, increasing the likelihood of an economic downturn, which lifted gold's safe-haven appeal and helped bullion prices gain more than 1% on Thursday.

Outlook: We expect gold to trade higher towards 51870 levels, break of which could prompt the price to move higher to 52270 levels.

 

CRUDE

On Thursday, crude prices witnessed a mixed set of action on Thursday, as Brent ended with nearly half percentage point gains and the NYMEX ended lower with nearly 1 percent cut.

The downside remained limited over a weaker US dollar as attention turns to what OPEC and allies including Russia agree at a meeting next week marking the end of their 2020 output reduction pact.

The next meeting of the Organization of the Petroleum Exporting Countries and allies led by Russia will be key, as the producers have now relaxed the record 9.7 million barrels per day supply cut they agreed in April 2020, when the COVID-19 pandemic slammed demand. However, it is said that OPEC will consider keeping oil output unchanged for September.

Outlook: All eyes on the outcome of the anticipated OPEC meeting, as prices might come under pressure if the group agrees to raise the output.

 

BASE METALS

The industrial base metals witnessed an extended mixed trading session, as the metals on the LME ended on a  positive note, except for Lead. And on the MCX, except for Nickel and Lead, all the others ended in the positive territory.

Copper prices rose to a three-week high as the dollar weakened, making dollar-priced metals more affordable to buyers using other currencies.

The Fed recently raised interest rates by 0.75 percentage points, but following Chairman Powell's remarks and the release of weaker-than-expected GDP figures, there is now some optimism that future rate rises will be more gradual.

Reports that China may provide 1 trillion yuan in loans for stalled real estate projects was another significant development, since greater stimulus will assist to boost market confidence.

Outlook: We expect copper to trade higher towards 654 levels, break of which could prompt the price to move higher to 665 levels.

 

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