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

GOLD

Gold continues to witness a pullback, slipping to one-month lows on Monday, given the up-move in the dollar as lingering worries over further aggressive U.S. interest rate hikes kept the yellow metal under pressure.

The dollar index neared its all time highs, which was set in the month of June, eventually making gold expensive for buyers holding other currencies.

Recent hawkish remarks from Fed officials have weakened the safe-haven appeal. Now the focus is on the Fed's Jackson Hole Symposium which is scheduled for later this week. A much-awaited speech that may indicate how high U.S. borrowing costs may rise and how long they may stay there in order to lower skyrocketing inflation.

The ECB asserted that worries about high inflation now outweigh worries about slowing economic growth by raising interest rates by an unexpectedly big 50 basis points from zero percent last month and promising additional rate hikes to come.

Outlook:The expectation that the Fed might seek a higher interest rate hike in an effort to reduce inflation could maintain pressure on gold prices.

CRUDE

Crude prices on Monday witnessed a volatile trade, as both benchmarks cracked over 4 percent as likelihood of a renewal of the 2015 Iran nuclear deal between Iran and the Western powers was said to be imminent, which weighed on market sentiment and induced the prices to drop sharply. However, it recovered some losses before going into the close.

After Russia invaded Ukraine and the West retaliated by imposing severe sanctions on Moscow, prices surged earlier this year to just below an all-time high of $147 per barrel, sparking concerns about the greatest energy supply crisis since the 1970s. On worries of a slowdown in the Chinese economy and a possible recession in the West, oil prices have fallen in recent weeks to about $95 per barrel.

In order to reverse the current drop in oil prices brought on by macroeconomic worries, the Organization of the Petroleum Exporting Countries is prepared to perhaps restrict production.

Meanwhile, the pipeline carrying oil from Kazakhstan via Russia has been damaged, raising fears about a drop in gas supplies while causing new energy supply disruptions for Europe. Exports from two of CPC's three mooring sites at a Black Sea terminal were reportedly suspended due to damage at the attachment points of underwater sleeves. CPC manages around 1% of the world's oil.

Outlook:If the 2005 Iran agreement is reached, it could result an increase in the oil supply in excess of 1MMbbls per day coming into the market, which might limit the upside in crude.

BASE METALS

On Monday, the base metals pack traded on a mixed note, as on the LME except for copper and lead, all the other metals ended on a positive note and on the MCX, copper and aluminium were the only metals to end on a lower note.

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