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

Gold edges lower for the week; Crude crawls higher over debt deal optimism.

GOLD

Gold prices fell 2% in the recent week, extending the loss from the previous week. The yellow metal's ongoing weakening has sent prices below the $2000 level, with prices trading near 6-week lows. 

This week, the overhang of headwinds got the better of gold. Optimism in the debt ceiling talks bolstered the dollar, sending the dollar index to a seven-week high, diminishing gold's appeal as a competing safe haven.

US economic data and aggressive comments from Federal Reserve officials fueled speculation that interest rate decreases might be postponed.

High interest rates make non-yielding gold less appealing, despite its significance as a hedge against economic volatility.

Outlook: We expect gold to trade higher towards 60800 levels, a break of which could prompt the price to move higher to 61040 levels.

CRUDE OIL

After falling for four weeks in a row, the benchmark oil indices paused in the most recent week, as the benchmark NYMEX index rose slightly more than 0.50 percent, snapping the recent streak of weakness in the crude prices. 

Crude prices started the week on a positive note, thanks to US plans to acquire oil for the Strategic Petroleum Reserve, which gave support while raging Canadian wildfires fuelled supply fears.

A large decline in US crude stockpiles, as demand likely soared to the highest levels since 2021, mixed with optimism surrounding US debt ceiling talks, helped oil benchmarks conclude on a higher note. 

However, the potential looks to be constrained by the increased chance that the US Federal Reserve would maintain higher interest rates for the remainder of the year.

A rising dollar can diminish demand for oil by making it more expensive for holders of other currencies to purchase.

Outlook: We expect crude to trade higher towards 6020 levels, a break of which could prompt the price to move higher to 6090 levels.

BASE METALS

Persistent weakness in the base metals pack drags the prices southwards. Aluminium and Lead, on the other hand, manage to hold their gains and end on a high note. 

Copper prices fell to five-month lows as solid US economic data drove the dollar to new seven-week highs, while stocks in warehouses registered with the London Metal Exchange continued to rise. 

After robust US economic data lowered hopes for additional Fed easing, the US dollar surged to seven-week highs, making dollar-priced commodities more expensive for buyers holding other currencies.

China's industrial output increased 5.6% year on year in April, up from 3.9% in March but still shy of the consensus 10.9%.

Furthermore, the downside risk for metals appears to be limited given China's short-term recovery is apparently being pushed by the PBOC's liquidity injection.

Outlook: Metal prices are likely to remain under pressure as a result of poor Chinese demand and a strong US Dollar.

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