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

Gold extends gains, Oil settles higher on production cuts

GOLD

After the yellow metals witnessed weeks of lower closing, it managed to crawl higher during the recently concluded week. However, the momentum was further extended on Monday, as prices continued to tick higher.

Gold rose on Monday after sluggish US services sector growth strengthened expectations that the Federal Reserve will hold interest rates steady next week.

In a high-interest-rate environment, non-interest-bearing bullion becomes less appealing to investors.

The services sector in the United States barely grew in May as new orders slowed, with the Institute for Supply Management's non-manufacturing index decreasing to 50.3 in May from 51.9 in April.

Outlook: Given the strong dollar and the uncertainties surrounding the impending US Fed meeting, gold prices are likely to be under pressure.

CRUDE

Crude continues its winning run on Monday, as both the benchmark indices ended on a higher note.

Crude prices have maintained their strong pace, days after Saudi Arabia's declaration that it will restrict supply even further. In July, output would be reduced by 1 million barrels per day (bpd) to 9 million bpd.

The voluntary cut by Saudi Arabia is the largest in years, and it comes on top of a broader agreement by OPEC and allies, including Russia, to curb output through 2024 in order to support falling oil prices.

Outlook: The rebound in petroleum prices, which began as a result of an expected output decrease, is set to continue as the world's top crude producer announced a voluntary output cut.

BASE METALS

Most of the metals managed to conclude the recent week on a higher note, however, on Monday, nearly all metals slipped lower, giving up the gains from the earlier week. However, copper prices stayed strong, as it gained over 1 percent.

Copper prices began the new week lower, but recovered later in the day after the dollar weakened during the day, following the announcement of dismal US economic data.

Copper stockpiles in LME-registered warehouses have nearly doubled since April 18, contributing to the copper price decline.

Outlook: We expect copper to trade higher towards 729 levels, a break of which could prompt the price to move higher to 734 levels.

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