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GOLD

After having a subdued week, gold prices ticked higher, as on Tuesday it gained nearly 2 percent ending at 2016.3$ per ounce.

Gold was on course for its biggest daily gain in a month, as yields fell on fresh fears of contagion in the US banking sector ahead of the Federal Reserve's widely anticipated interest rate hike.

Shares of regional banks in the United States declined, while Treasury yields fell, as the failure of First Republic Bank raised market fears about the viability of other mid-sized lenders.

While gold is regarded as a hedge against economic uncertainty, rising interest rates reduce demand for the zero-yielding asset.

Outlook: Since an increase in interest rates by the US Federal Reserve would likely limit price gains and stifle demand, gold prices are anticipated to stay low.

CRUDE OIL

The weakness in crude prices intensifies, after ending the week lower, prices continue to slump. Both benchmarks fell more than 5% to a five-week low on Tuesday, as US policymakers discussed methods to avert a debt default and investors braced for more rate hikes this week, which might dampen energy consumption.

To battle inflation, the US Federal Reserve is projected to raise interest rates by another 25 basis points on Wednesday, while the European Central Bank is also expected to boost rates at its normal policy meeting on Thursday.

Energy prices are also under pressure after data from China released over the weekend indicated that factory activity in April declined sharply. China is the world's largest energy consumer and crude oil buyer.

Outlook: We expect crude to trade lower towards 5790 levels, a break of which could prompt the price to move lower to 5680 levels.

BASE METALS

The base metals pack had a mixed day on Tuesday, with copper retracing from one-week highs due to sluggish factory activity in major metals customer China and uncertainty about US interest rates.

Data showing China's manufacturing activity fell sharply in April also weighed on the market, putting pressure on regulators aiming to stimulate an economy struggling to recover post-COVID.

The market was also concerned about whether the United States Federal Reserve will hint this week that it expects a pause in interest rate hikes following a widely anticipated 25 basis point increase.

Outlook: We expect copper to trade lower towards 732 levels, a break of which could prompt the price to move lower to 726 levels.

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