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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 on Thursday slipped below the 1700$ mark, as it ended 0.85 percent lower at 1696.1$ per ounce.

Gold fell on Thursday as the dollar surged and Treasury yields rose amid rising expectations that the Federal Reserve will continue to raise interest rates aggressively in the coming months. The dollar reached a new 20-year high on the back of recent data and hawkish remarks from Fed Chair Jerome Powell and other central bank officials.Investors expect the US Federal Reserve and the European Central Bank to raise their main borrowing prices by 75 basis points in their upcoming meeting this month.

Disappointing manufacturing data out of Europe and Asia has added to worries about the potential for a global recession.

Outlook: The anticipation that the Fed would hike the interest rates in its upcoming meeting will act as a major headwind for gold prices.

CRUDE

Oil prices after dropping lower on Wednesday continue to witness pressure as both the benchmark indices ended with a sharp cut on Thursday. The Brent ended with a 4.07 percent cut, whereas the NYMEX ended 3.28 percent lower.

The pullback in crude prices throughout the week is paving the way for a weekly loss on the back of demand concerns, as both benchmarks hit new multi-week lows on Thursday amid rising demand concerns stemming from a variety of soft economic activity, such as central bank hawkishness, and a complete lockdown of the Chinese city of Chengdu.

Fears that a slowing global economy will reduce fuel consumption weighed on the market. The strengthening of the US currency was also a headwind.  Oil prices are inversely related to the price of the US dollar.

Outlook: We expect crude to trade lower towards 6820 levels, a break of which could prompt the price to move lower to 6680 levels.

BASE METALS

The weakness in the base metals was extended during Thursday's session, as all the metals on the LME and MCX ended on a negative note with Nickel and Zinc being the top losers, ending with over 5 percent cut as the US dollar index soared to a 20-year high.

Prices fell as recent statistics from the world's leading economies revealed weak economic performance, dampening demand for industrial metals. Factory activity in China, the world's largest metals consumer, has slowed due to renewed concerns over COVID-19 cases. For the second month in a row, China's official Caixin manufacturing PMI declined.

Following the smelting fiasco in recent weeks caused by rising power prices in China and across Europe, Nexa Resources, one of the world's top five zinc producers, suspended its Atacocha San Gerardo open pit zinc mine in Peru due to an illegal road blockade by a local community. As the global energy crisis worsens, overseas aluminum smelters face the prospect of reducing production.

Outlook: We expect copper to trade lower towards 626 levels, a break of which could prompt the price to move lower to 616 levels.

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