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Below is Daily Commodity Article by Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities, and Currencies, Angel One Ltd

Crude prices surged over Chinese demand optimism

GOLD

The half percentage point gains observed on Monday were extended on Tuesday, with gold prices up 0.54 percent to 1827.2 dollars per ounce.

Despite the uptick, investors are bracing for further US interest rate hikes in the face of persistently high inflation.

Following a streak of positive economic indicators, money markets estimate the US Federal Reserve's target rate to peak at 5.425% in September.

High interest rates diminish the appeal of gold as an inflation hedge while increasing the opportunity cost of holding the non-yielding asset.

Outlook: The anticipation that the US Fed would raise the interest rates further would limit the upside in the yellow metal.

CRUDE OIL

Post the weakness seen on Monday, crude prices bounced back in the following session, as both benchmark indices climbed nearly 2 percent higher, offsetting the losses from the other day. 

The rise in crude occurred as reports of increased factory activity in China, the world's largest crude importer, bolstered global fuel demand.

Oil prices were also bolstered by data showing that China's manufacturing activity increased in February for the first time in seven months, according to the purchasing manager's index (PMI). The fastest expansion in manufacturing since 2012, according to official government PMI data.

But, concerns of swelling crude stocks in the United States, the world's largest oil consumer and producer, overshadowed the robust demand signal.

OPEC oil output increased in February, led by a further recovery in Nigerian supply, despite top producers sticking to an agreement by the broader OPEC+ coalition to restrict production to support the market.

Outlook: We expect crude to trade higher towards 6540 levels, a break of which could prompt the price to move higher to 6650 levels.

BASE METALS

After a solid start to the week, the base metals pack experienced a mixed session on Tuesday, with nickel, lead, and zinc slipping down while other metals edged higher.

Copper, on the other hand, held its ground, rising nearly 2% as better-than-expected manufacturing activity data from major consumer  China boosted optimism, while a higher US dollar and easing supply fears weighed on the market.

China's manufacturing activity climbed more rapidly than anticipated in February, reaching the highest level since April 2012, according to official data, as consumer confidence grew in anticipation of the country's COVID-19 restrictions being eased.

A rising dollar raises the cost of the metals to buyers holding other currencies.

Outlook: Copper prices are anticipated to remain up because to the confidence emanating from China. Nevertheless, the upside would be limited due to the expectation of additional rate hikes by the US Fed.

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