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Below is Gold Article by Mr. Prathamesh Mallya, DVP Research, Non-Agro Commodities & Currency, Angel One Ltd.     

Gold continues to slump; Crude prices take a breather

GOLD

Gold prices dipped as the U.S. dollar and Treasury yields strengthened post-Friday's job report digestion, eyes on impending U.S. inflation data.

Despite fewer July jobs, solid wages and lower unemployment indicated ongoing labor market tightness.

Dollar and 10-year Treasury yields rebounded, spotlight on Thursday's U.S. consumer price index (CPI) data for rate hike insights.

Gold, a non-yielding inflation hedge, can lose luster during rate hikes. President John C. Williams of the Federal Reserve Bank of New York envisions potential interest rate decline next year, per New York Times.

Outlook: We expect gold to trade lower towards 59100 levels, a break of which could prompt the price to move lower to 58940 levels.

CRUDE OIL

Crude prices declined around 1% previously due to anticipated weaker demand from China and the U.S.

Saudi Arabia, the top global exporter, prolonged a voluntary 1 million barrels per day output cut into September, suggesting a focus on prices beyond $80 per barrel.

Russia also plans a 300,000 barrels per day cut in September exports. The OPEC+ ministerial panel maintained existing oil output policy after Saudi's extension, following a June agreement to limit supply through 2024.

2023's 3.66 million barrels per day cuts continue, with deeper reductions of 1.4 million barrels per day from January 2024.

Outlook: We expect crude to trade higher towards 6920 levels, a break of which could prompt the price to move higher to 7000 levels.

BASE METALS

Copper prices dropped due to concerns over industrial metal surpluses, elevated stocks, weak demand in China, and a stronger dollar.

The International Copper Study Group reported a 287,000-tonne surplus from January to May. Despite potential support from lower U.S. rates and mining costs, demand remains sluggish in China and global manufacturing.

The Yangshan copper premium fell 40% over a month, reflecting reduced Chinese copper import demand.

August may see improved copper supply as smelters resume operations after maintenance, driven by high processing charges.

LME-approved warehouse copper inventories surged nearly 50% since July 12. A strengthening dollar dampened industrial metals amid inflation data anticipation.

Outlook: Anticipated downward pressure on metal prices is foreseen due to uncertainties surrounding the delayed stimulus package, ultimately limiting potential gains within the metal markets.

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