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GOLD

Spot gold on Thursday saw cracked down nearly 2 percent, ending at 1663.7$ per ounce, dropping to its lowest levels since April 2020, as sentiments were affected by elevated U.S. Treasury yields and a firm dollar, as bets of another hefty rate hike by the US Federal Reserve eroded the yellow metal's appeal.

Interest rate hikes increase the opportunity cost of owning non-yielding metal, despite the fact that gold is seen as a safe investment during economic turmoil.

The recent increase in the US dollar index, rising US Treasury yields, and the hike in U.S. inflation figures have all worked together to keep gold buyers largely inactive.

Following the Fed's policy meeting next week, the markets have fully priced in an interest rate increase of at least 75 basis points, and maybe even up to 100 basis points.

Outlook: We expect gold to trade lower towards 48870 levels, a break of which could prompt the price to move lower to 48450 levels.

CRUDE OIL

Crude prices are witnessing volatile moves, as Brent prices slipped over 4 percent, whereas NYMEX also settled nearly 4 percent lower. Prices were corrected on Thursday after seeing an uptick in the previous session.

Concerns over supply and a possible rail shutdown in the United States, the largest consumer of crude oil in the world, were allayed after unions secured a tentative agreement following 20 hours of intense negotiations with President Joe Biden's administration to prevent a rail shutdown that might have impacted food and fuel supplies throughout the nation and beyond.

After spiking nearly to all-time highs in March due to supply concerns exacerbated by Russia's invasion of Ukraine and pressure from the likelihood of a recession and decreased demand, crude prices have since significantly declined.

The rise in US crude inventories was one of the additional factors influencing oil prices. To protect consumers from rising energy prices, the European Union's executive is planning to raise more than 140 billion euros. 

Outlook: We expect crude to trade higher towards 6720 levels, a break of which could prompt the price to move higher to 6580 levels.

BASE METALS

The base metals pack continues to witness a mixed set of action, as on the LME and on the MCX except for Aluminium, all other metals ended on a negative note.

As Europe struggled with a power crisis that slowed production of the energy-intensive metal, aluminum, prices rose on Thursday. However, other industrial metals, like copper, fell due to continued concerns that a recession in the world economy would reduce demand.

Amid the electricity crisis, about half of the EU's capacity for producing aluminum and zinc has already been shut down. Because electricity shortages in Europe may worsen in the winter, pressure on the energy-intensive metals may remain in the near future.

Outlook: We expect copper to trade lower towards 638 levels, a break of which could prompt the price to move lower to 628 levels.

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