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

GOLD

The yellow metal started the new week on a lower note, falling below the $1800 level after a good previous week. However, it later turned around in the ensuing sessions, making up all of the losses, rising to highs not seen in five months, and concluding the week upward.

The price of gold rose 0.6 percent for the week. Although US inflation figures and the Federal Reserve's decision on its monetary policy were scheduled to be released, traders maintained their caution throughout the week.

The US Federal Reserve raised interest rates by 50 basis points at its final meeting of the year while simultaneously indicating that, even if the economy faces a recession, future rate hikes are probable.

High interest rates tend to reduce demand for the yellow metal, which is traditionally regarded as an inflation hedge, as the opportunity cost of holding the non-yielding metal rises.

Outlook: We expect gold to trade lower towards 53990 levels, a break of which could prompt the price to move lower to 53770 levels.

CRUDE OIL

Crude prices experienced a rebound after falling to their lowest levels since December 2021 and finishing the previous week on a negative note. However, the benchmark NYMEX index ended the week 1.5 percent higher.

Oil prices rose after a significant pipeline that supplied oil to the United States was shut down, and Russia threatened to cut production in response. The storage facility and delivery point for US benchmark crude oil, Cushing, Oklahoma, would experience a decrease in supply as a result of this disruption.

The International Energy Agency's projections that Chinese oil demand will climb next year after dropping by 400,000 bpd in 2022 and anticipation that Chinese demand will increase when COVID-19 constraints are lifted maintained prices higher.

However, the second-largest economy in the world lost more momentum in November as a result of slowing factory output and retail sales that continued to decline, the weakest data in six months. 

Outlook: We expect crude to trade higher towards 6370 levels, a break of which could prompt the price to move higher to 6490 levels.

BASE METALS

After snapping the winning streak in the previous week, prices continued to be under pressure, as all the metals ended on a lower note, with LME Zinc being the top losing metal.

The metal prices were caught in the uncertainty whether the US Federal Reserve would slowdown the rate of interest rate increases at its policy which was scheduled during the week.

Metal prices have dropped by almost 1% each, though, as the biggest consumer of metals in the world struggles with the COVID-19 cases and worries about interest rate hikes.

The dollar index weakened, which reduced the price of goods purchased in dollars for consumers using foreign currencies. As a result, the downside risk was contained.

China, the biggest consumer of metals worldwide, experienced a further slowdown in its economy in November as a result of decreased industry output and persistent losses in retail sales.

Outlook: We expect copper to trade lower towards 694 levels, a break of which could prompt the price to move lower to 684 levels.

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