Below is Commodity Article by Mr. Saish Sandeep Sawant Dessai, Research Associate- Base Metals, Angel One Ltd
Gold prices increased on Wednesday, as the yellow metal posted gains of 0.98 percent and ended at 1733.9$ per ounce.
After the Federal Reserve hiked interest rates by 75 basis points as anticipated and the chairman was less aggressive about future rate hikes, gold prices rose, while the dollar and Treasury yields declined. To tackle skyrocketing inflation, the U.S. central bank increased rates on Wednesday by an unusually high margin in the second straight meeting.
However, the anticipation of another rate hike in the upcoming meeting may be appropriate, given the incoming economic data which would pave the way for any such rate hikes.
Gold priced in dollars becomes more affordable for holders of foreign currencies as the dollar declines. Benchmark U.S. Treasury yields fell to near two-month lows, as lower bond yields reduce the opportunity cost of holding non-interest bearing gold.
Outlook: We expect gold to trade higher towards 51150 levels, which could prompt the price to move higher to 51550 levels.
On Wednesday, crude prices bounced back as benchmarks ended on a positive note with Brent gaining 2.13 and NYMEX gaining 2.40 percent.
Lower US stockpiles and a drop in Russian gas exports to Europe countered worries about reduced demand and a 75 basis point rate hike by the Federal Reserve, causing oil to rise.
Oil prices have surged in 2022, reaching a 14-year high of $139 a barrel in March as demand rebounded from the pandemic and supply concerns increased due to Russia's invasion of Ukraine.
Since then, despite supply disruptions in Libya and Nigeria and reductions in Russian gas exports to Europe, have increased worries about an economic slowdown and rising interest rates.
Outlook: We expect crude to trade higher towards 7950 levels, which could prompt the price to move higher to 8060 levels.
The industrial base metals continued to witness a mixed trading session, as the metals on the LME ended on a positive note, except for Lead. And on the MCX, except for Zinc, all the others ended in the positive territory.
Copper prices rose on Wednesday on hopes of improved demand from top consumer China after COVID-19 lockdowns hindered factory activity earlier in the year
The dollar's depreciation as a result of the Federal Reserve's 75 basis point increase in interest rates to battle skyrocketing inflation was another factor that contributed to gains.
The metal used in electricity and construction, however, has bounced back from a 20-month low but is still down 30% from a record high in March, as aggressive interest rate hikes in many countries can cause an economic slowdown.
Outlook: We expect copper to trade higher towards 648 levels, which could prompt the price to move higher to 659 levels.
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