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

GOLD

The yellow metal was off to a disappointing start to the week as it slipped to one-month lows on the back of a strong dollar index along with an uptick in the US treasury yields, as the rates remained near multi-week highs

Gold did recover from its lows as the dollar weakened slightly and investors remained cautious due to uncertainties surrounding the Fed Chair's speech. The dollar, on the other hand, stayed steady as it rose versus a basket of other currencies, as concerns about future aggressive US interest rate hikes put the yellow metal under pressure

More pressure was mounted after the Fed chair's remarks at the Jackson Hole Symposium hinted at more rate hikes by the US Federal Reserve in order to contain growing inflation.

Since March, the Federal Reserve has raised its benchmark overnight interest rate by 225 basis points. Higher interest rates increase the opportunity cost of holding non-yielding gold while increasing the US currency.

Outlook: We expect gold to trade lower towards 50800 levels, a break of which could prompt the price to move lower to 50380 levels.

CRUDE

Crude oil prices began the week on a volatile note, with prices slipping more than 4%. However, it recovered quickly after top producer Saudi Arabia suggested that OPEC is willing to cut output to offset a recent drop in oil prices caused by macroeconomic concerns, which has ignored tightness in crude supply coupled with signs of improved fuel demand, putting the benchmark on track for weekly gains.

After Russia invaded Ukraine, post which the West retaliated by slapping severe sanctions on Moscow, oil prices rose to just below an all-time high of $147 per barrel, raising concerns of a supply crisis.

Since attaining that level, oil prices have been steadily declining amid concerns about a slowing Chinese economy and a probable recession in the West, oil prices have plunged in recent weeks to around $95 per barrel. The dramatic decline seen at the start of the week was caused by the possibility of a renewal of the 2015 Iran nuclear deal between Iran and the West, which is considered to be imminent, weighed on market sentiments and caused prices to fall sharply.

Outlook: Crude prices are projected to remain elevated because of improved demand and the ongoing supply bottleneck, while OPEC+ considers cutting output

BASE METALS

The industrial metals Aluminium, Zinc, and Copper ended the week on a higher note, with Aluminium being the top gainer, gaining 4.3 percent.

Because of high electricity prices in most European countries, aluminum and zinc producers are either closing their smelters or reducing the production of the metals. Another aluminum producer, Speira, is considering cutting production at its German smelter to half capacity, while another smelter Sunndal goes on strike

Another tailwind was the top consumer China, which cut its benchmark lending rate this week in an effort to help its real estate sector. This move raised hopes for a rebound in metals demand.

The US dollar index, which is nearing all-time highs, has kept the gains in check, making dollar-denominated commodities more expensive for buyers holding other currencies.

Outlook: We expect copper to trade lower towards 669 levels, a break of which could prompt the price to move lower to 659 levels.

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