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

Gold remains subdued, Oil settles sharply higher.

GOLD

Weeks after the yellow metal had seen consecutive lower closings, gold prices rallied and managed to conclude the week with minor gains of 0.2 percent.

This week, prices started off on a higher note, rising 1% as they recovered from their lowest level in more than two months as the dollar retreated from recent highs, while concerns about the US debt ceiling negotiations kept investors on edge and revived demand for the safe-haven metal.

Despite the recent pullback, gold is on track for its first monthly drop in three months, as the US dollar climbed on expectations that the Federal Reserve will keep interest rates higher for a longer period of time than previously thought.

Increases in interest rates continue to be a drag on gold since they raise the opportunity cost of possessing a non-yielding metal.

Outlook: We expect gold to trade lower towards 59340 levels, a break of which could prompt the price to move lower to 59220 levels.

CRUDE OIL

Crude ended another solid week, with the benchmark NYMEX index up more than 3%.

Given the long holiday weekend in several areas of the world, benchmark crude indices experienced a thin trading session this week. Despite the holiday-shortened week, the benchmark index was able to extend its winning streak as the uncertainty around the US debt ceiling agreement became clear helping to stimulate demand.

However, prices fell as data indicated an unexpectedly high build in US crude stocks last week, raising fears of oversupply amid signs of weakening Chinese demand.

Meanwhile, Chinese data showed that factory activity declined faster than expected in May, heightening concerns about demand in the world's second-largest oil user.

Furthermore, investors are anticipating another output cut at the OPEC+ meeting, which will likely strengthen prices even further.

Outlook: We expect crude to trade higher towards 6050 levels, a break of which could prompt the price to move higher to 6150 levels.

BASE METALS

Following the significant decline seen in the metals pack in the previous weeks, most metals took a breather this week, with the exception of Lead, which continued to end lower.

Despite a holiday-shortened week, metals fared well throughout the week, with aluminium being the biggest gainer.

The uncertainty surrounding the US debt ceiling was largely put to rest after US President Joe Biden and Republican Kevin McCarthy agreed to postpone the $31.4 trillion debt ceiling until 2025.

Copper prices, which had been hanging near six-month lows, have risen on the back of an unexpected increase in industrial activity in China. The Caixin manufacturing PMI improved to 50.9 in May, signaling a return to growth, in contrast to the official NBS PMI, which showed a fall in activity on Wednesday.

However, the metals' upside is likely to be limited as China's yuan sank to its lowest level against the dollar since November, making them more expensive for Chinese buyers.

Outlook: Due to sluggish demand and dismal Chinese data, metal prices are expected to continue to decline, which points to additional price pressure.

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