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

GOLD

The up-move in the gold prices was extended further, buoyed by a weaker dollar index that slipped to 7-month lows.

Since the US Federal Reserve increased interest rates by 50 basis points at its previous meeting, and it is anticipated that the Fed would announce a 25 basis point rate hike at its next policy meeting, there was further speculation that the Fed will slow the rate hikes.

Lower interest rates typically benefit gold since they reduce the cost of owning the non-yielding asset. Prices did, however, come under pressure this week as the dollar started to show signs of reprieve, which limited the gains.

According to a study by the China Gold Association, consumption of metal declined in 2022 in China, the world's largest consumer of gold, but output rose.

Outlook: We expect crude to trade higher towards 6640 levels, a break of which could prompt the price to move higher to 6750 levels.

CRUDE OIL 

After concluding the previous week on a positive note, the benchmark crude index NYMEX further strengthened its gains, gaining over 1 percent.

Gains in crude were supported by the easing of China's strict COVID-19 regulations, along with OPEC's monthly forecast that China's oil demand will rise by 510,000 barrels per day (bpd) this year after witnessing its first decrease in the year 2022.

The up-move however remained capped as investors worried about an anticipated US economic slump, capping the upward movement. Federal Reserve officials stated that rates needed to rise over 5% in order to limit inflation.

Further, industry data revealed a significant and unexpected increase in US crude stocks for a second week, and worries about a decline in fuel consumption increased which led to a decline in oil prices.

Outlook: We expect crude to trade lower towards 6500 levels, a break of which could prompt the price to move lower to 6450 levels.

BASE METALS

Looking at the base metals pack, lead, which was one of the laggards during the previous week, continued to underperform in the subsequent week along with aluminum, which ended lower too.

Given that the major consumer's economy severely contracted in the fourth quarter and that 2022's growth will be among the weakest in over fifty years, together with a strong dollar as attention switched to deteriorating demand, the metals pack started the week on a mixed note.

However, after reaching 7-month highs, copper prices started to decline due to supply issues and a shortfall in demand in top consumer China. However, uncertainty around supply and a weak US currency helped to keep the prices elevated.

Outlook: Due to demand optimism from China, prices of metals would see further uptick. Also, the weaker dollar would further help the prices remain at a elevated level.

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