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

GOLD

On Wednesday, spot gold ended on a marginally higher note, up 0.07 percent to end at 1853.3$ per ounce.

Gold prices were constrained by rising Treasury yields ahead of critical U.S. jobs and inflation data this week, limiting the upside. The appeal of zero-yield gold has dwindled as benchmark US Treasury yields have remained firm.

Gold demand is expected to fall this year, owing to lower jewelry sales and retail investment in China as a result of COVID-19 lockdowns and a slowing economy. However, the supply of gold will rise slightly as mines expand production and increase recycling too.

As policy rates rise and inflation falls, real rates and yields are likely to climb significantly in the second half, putting downward pressure on gold prices. However, the downside will be limited, as weaker economic growth and systemic risks will encourage investors to diversify into gold.

Outlook: e expect gold to trade higher towards 51290 levels, a break of which could prompt the price to move higher to 51620 levels.   

CRUDE

Crude extends its gains as Brent crude ended higher by 1.30 percent while NYMEX crude was up 2.26 percent on Wednesday. Both benchmarks closed Wednesday at their highest since March 8, matching levels seen in 2008.

Oil prices remained near 13-week highs, supported by strong demand in the world's largest consumer, the United States, while demand in China is projected to pick up as COVID-19 curbs in major cities are eased. On a very tight supply market, the price of oil could continue to rise."

According to the EIA's data, US commercial crude oil stockpiles surprisingly increased last week, while the Strategic Petroleum Reserve declined by a record amount as refiners ramped up production to pre-pandemic levels. Crude inventories increased by 2 million barrels to 416.8 million barrels in the week ending June 3, contrasting with predictions of a 1.9 million-barrel reduction.

Outlook: We expect crude to trade higher towards 9690 levels, a break of which could prompt the price to move higher to 9880 levels.   

BASE METALS

Post ending the previous session on a negative note, the base metals pack witnessed a relatively better day on Wednesday, as most of the metals ended on a positive note, except for Nickel, which was the only metal to end on a negative note.

Copper along with other metals saw a rebound on Wednesday on hopes for a demand recovery in top metals consumer China and another aid being, the dollar, which erased gains its earlier gains. But copper's gains were capped by worries about global growth. LME copper has rebounded about 8% since touching a seven-month low.

The market is attempting a nascent rebound on the likelihood of Beijing and Shanghai, China's commercial powerhouse resuming normalcy in recent days after a two-month merciless lockdown.

On Wednesday, the OECD (Organisation for Economic Co-operation and Development) lowered its growth expectations and raised its inflation forecasts, a day after the World Bank cut its growth estimates.

After officials declared an environmental emergency in the region earlier this week, Chilean state-owned Codelco, the world's largest copper miner, has shut down its Ventanas smelter and refinery for repairs.

Outlook: We expect copper to trade higher towards 810 levels, a break of which could prompt the price to move higher to 822 levels.   

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