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GOLD

Gold prices sank about 1% to a three-month low on Thursday as US Federal Reserve Chair Jerome Powell concluded his testimony.

The prospect of further rate hikes outweighed any benefit from a weaker labor market. Gold pared its losses despite a brief comeback as data indicated stable unemployment claims.

The expectation of central banks fighting inflationary pressures and the likelihood of future rate hikes remain the primary factors weighing on the gold market.

The dollar recovered and Treasury yields increased, but Powell's hawkish tone had little effect on investor expectations, with betting on only one more rate hike this year, followed by cuts in January.

The appeal of gold as an inflation hedge diminishes when high interest rates are implemented to control prices.

Outlook: We expect gold to trade lower towards 58020 levels, a break of which could prompt the price to move lower to 57910 levels.

CRUDE

Oil prices fell for the second straight session, with a weekly decrease of more than 3%, due to concerns about demand sparked by a higher-than-expected interest rate hike in the UK and indications of looming rate hikes in the US.

The recent appreciation of the dollar may have a negative influence on oil consumption by making it more expensive for holders of other currencies.

The recent drop in oil prices coincided with the Bank of England's decision to hike interest rates, raising concerns about a probable economic slowdown that would harm oil demand.

The uncertainty surrounding prospective interest rate increases by major central banks has muddled the forecast for fuel consumption for the rest of the year

Outlook: Crude oil prices are likely to stay under pressure as central banks around the world raise interest rates in effort to contain inflation.

BASE METALS

On Thursday, copper prices on the LME reached a two-month high before falling due to a stronger dollar, which negated the positive effect of lower available stockpiles in LME-registered warehouses.

The firm US dollar index, driven by risk aversion, made dollar-denominated commodities less appealing to buyers with other currencies.

Copper inventory at monitored warehouses in China fell 1.1% this week, but sentiment remained gloomy due to the lack of any economic stimulus to boost metal demand growth.

Outlook: We expect copper to trade lower towards 722 levels, a break of which could prompt the price to move lower to 719 levels.

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