IGI Logo

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

Gold nears an all-time high; growth worries continue to hammer crude

GOLD

On Wednesday, gold continued to march northwards, as prices gained significantly, bringing it closer to record levels. Gold was up 1.13% to end at 2039.0$ per ounce.

The up-move came as US yields and the dollar dipped after the US Federal Reserve hinted it may pause its rate-hike cycle.

The Federal Reserve lifted its benchmark overnight interest rate by 25 basis points but no longer stated that it anticipates more rate hikes. However, the Fed will closely monitor economic data to determine whether additional hikes are warranted.  

Banking concerns remain unresolved resulting in sustained safe-haven demand.

Economic uncertainty and lower interest rates tend to increase demand for zero-yielding assets.

Outlook: We expect gold to trade higher towards 61390 levels, a break of which could prompt the price to move higher to 61740 levels.

CRUDE

Crude prices were down by over 5 percenr for the second day straight, adding to the decline for the week for over 10%.

Prices have fallen this week on signs of slowing manufacturing development in China, the world's largest oil importer, and after the United States, the world's largest oil user, boosted interest rates to their highest level since 2007, threatening future economic growth.

Investors are also watching the European Central Bank, which is expected to hike interest rates for the seventh time in a row on Thursday.

OPEC and its partners, including Russia, began voluntary supply cuts of roughly 1.16 million barrels per day at the beginning of this month, which are expected to bolster the market as it enters the summer high-demand period.

Outlook: Crude prices are likely to stay under pressure as China and other major users show signs of slowing economic growth.

BASE METALS

On Wednesday, the weakness in the base metals was stretched to yet another day, except for Zinc, which held onto its gains to end higher.

However, trading volume remained low due to the Shanghai Futures Exchange being closed for a national holiday. The Chinese stock exchange will reopen for business on Thursday.

The US Fed delivered the much-anticipated 25 basis point rate boost, paving the way for a pause in its rapid tightening cycle, though markets were buffeted by risk aversion amid a sell-off in regional US bank stocks.

Outlook: We expect copper to trade lower towards 728 levels, a break of which could prompt the price to move lower to 723 levels.

Please refer disclaimer at https://www.angelone.in/ 
SEBI Regn. No.: INZ000161534

Above views are of the author and not of the website kindly read disclaimer