Below is Commodity Article by Mr. Saish Sandeep Sawant Dessai, Research Associate- Base Metals, Angel One Ltd
On Tuesday, prices of the yellow metal clawed back into positive territory, as it ended on a higher note with 0.29 percent gains, ending at 1764.9$ per ounce.
While investors anticipated the U.S. non-farm payrolls report later this week, which could provide additional hints on the Federal Reserve's plans to raise interest rates. Gold prices increased, supported by a decline in the dollar and US treasury yields.
While benchmark U.S. 10-year Treasury yields declined from a more than one-week high, the pullback in the dollar index eventually made the greenback-denominated gold less expensive for holders of other currencies.
Fed members signaled that the central bank is committed to raising interest rates in the country to a level that will more severely curb economic growth and put a dent in the highest inflation since the 1980s.
Outlook: We expect gold to trade higher towards 51820 levels, a break of which could prompt the price to move higher to 52220 levels.
Crude prices witnessed a sharp dip during Tuesday's trading session, as both the benchmarks Brent and NYMEX ended with a cut of 2.38 percent and 3.98 percent respectively.
Crude prices dropped, hitting multi-month lows as a result of reports indicating sluggish US fuel demand. According to the EIA, US crude oil inventories unexpectedly increased last week as exports decreased and gasoline stocks unexpectedly increased as consumption slowed.
On the supply side, ministers for the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+ agreed on a modest increase in the group's output objective, which is equivalent to around 0.1% of the world's oil demand. The group lowered its prediction for the surplus on the oil market this year by an additional 200,000 barrels per day, to 800,000 BPD.
Outlook: We expect crude to trade higher towards 7390 levels, a break of which could prompt the price to move higher to 7500 levels.
The base metals on the LME ended on a lower note, as all the metals ended in the negative territory, whereas, on the MCX, except for Zinc, all the other commodities ended lower.
The price of copper decreased in the previous session, but it ended nearly unchanged. Concern that further interest rate increases might slow down global economic activity was increased by tensions between the United States and China, the world's largest consumer of metals.
In addition to concerns about a potential global recession, the geopolitical worries come on top, as a Federal Reserve official stated on Wednesday that the U.S. central bank would be aggressive in its efforts to reduce inflation.
Hopes about a slower pace of rate hikes and Chinese stimulus helped copper rebound about 15% after touching 20-month lows.
Outlook: We expect copper to trade lower towards 634 levels, a break of which could prompt the price to move more down to 624 levels.
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