Commodity Article : Gold prices at 3-weeks high; Crude gains momentum Says Prathamesh Mallya, Angel One
Below is Gold Article by Mr. Prathamesh Mallya, DVP Research, Non-Agro Commodities & Currency, Angel One Ltd.
Gold prices at 3-weeks high; Crude gains momentum
Gold reached a three-week high on Wednesday, driven by anticipation of forthcoming U.S. economic data influencing the likelihood of a Federal Reserve interest rate hike.
The decline in U.S. job openings in July, nearing pre-pandemic levels, has prompted speculation that the Fed could address inflation without a significant uptick in unemployment.
While 10-year yields rose from a two-week low and the dollar remained close to recent lows, gold, being non-interest-bearing, thrives when bond yields decrease.
Investors are now focused on the PCE price index, and the upcoming nonfarm payrolls report for further insights into gold's performance.
Outlook: We expect gold to trade higher towards 59600 levels, a break of which could prompt the price to move higher to 59650 levels.
Global oil prices have gained momentum, supported by decreased U.S. supply and concerns over China's economic slowdown.
This week's price surge is attributed to tighter crude supplies in the U.S., coupled with a military coup in Gabon, an OPEC member, raising worries of potential oil supply disruptions.
Anticipation is building for Saudi Arabia's expected extension of a voluntary 1 million barrels per day oil cut into October, aligning with OPEC+ efforts to curb output.
With the U.S. revising down last quarter's GDP growth and showing slowed private payroll expansion in August, the Federal Reserve's interest rate trajectory could shift if economic conditions continue to decelerate.
Amidst China's persistent factory activity contraction, which threatens the country's recovery prospects, oil prices remain influenced by complex global economic dynamics.
Outlook: We expect crude to trade higher towards 6810 levels, a break of which could prompt the price to move higher to 6870 levels.
Copper prices gained ground, propelled by a weakening dollar following lackluster U.S. data and initiatives to bolster China's struggling property market.
The drop in the dollar index to a two-week low rendered commodities priced in U.S. currency more affordable for non-dollar buyers, augmenting the appeal of metals.
Amid this backdrop, LME copper reversed its losses to secure gains, a response intensified by the downward revision of U.S. Q2 economic growth and lower-than-anticipated private payroll expansion in August.
These developments collectively diminished expectations of near-term interest rate hikes by the Federal Reserve, fostering a conducive environment for base metals.
In addition, positive news emerged as major Chinese cities eased mortgage restrictions, reinforcing efforts to rejuvenate the beleaguered property sector.
Outlook: We expect copper to trade higher towards 741 levels, a break of which could prompt the price to move higher to 743 levels.
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