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

Gold slips near 1-week lows; Crude settles on a firm note.

GOLD

Gold prices slipped to a one-week low as investors turned to the U.S. dollar amidst weak data from China.

However, the decline was tempered by rising expectations that the U.S. Federal Reserve might pause interest rate increases, making gold less expensive for other currency holders.

The dollar gained momentum, reaching a three-month high due to sluggish growth in China's services sector. Nevertheless, hopes of a potential end to interest rate hikes buoyed gold's performance.

Recent U.S. economic data indicated a soft landing scenario, reducing concerns about inflation and recession and solidifying the belief that the Fed might not need to raise rates further.

Currently, traders foresee a 93% probability of the Fed maintaining rates at its upcoming policy meeting and a 60% chance of rates staying unchanged for the rest of the year.

Gold, being non-interest-bearing, often loses appeal when rates climb, but market attention also remains on upcoming statements from Fed officials.

Outlook: We expect gold to trade lower towards 59200 levels, a break of which could prompt the price to move lower to 59110 levels.

CRUDE

Oil prices edged higher as concerns of a supply shortage grew following Saudi Arabia and Russia's unexpected decision to extend their voluntary supply cuts until the end of the year.

While markets had anticipated an extension into October, the three-month prolongation raised uncertainty about its impact on Western inflation and economic policies.

Saudi Arabia will continue its 1 million bpd output reduction, while Russia extends a 300,000 bpd cut until year-end.

These voluntary reductions supplement the April cuts agreed upon by multiple OPEC+ producers, further extending through 2024, potentially amplifying the likelihood of fiscal tightening due to rising oil prices.

Outlook: We expect crude to trade higher towards 7180 levels, a break of which could prompt the price to move higher to 7240 levels.

BASE METALS

Copper prices in London displayed resilience on Tuesday, recovering from initial declines, as the market evaluated China's recent measures to bolster its sluggish property market.

Despite China's services sector showing its slowest growth in eight months in August and weak demand persisting in the second-largest global economy, copper, extensively used in power and construction, is poised for near-term support due to China's traditional peak demand season in September.

The dollar index reached nearly a six-month high amidst disappointing global economic data, which could potentially make dollar-priced metals more expensive for buyers using other currencies.

Meanwhile, business activity in the euro zone worsened faster than expected last month, and in the United States, factory orders declined in July, ending a four-month streak of gains.

Outlook: We expect copper to trade lower towards 734 levels, a break of which could prompt the price to move lower to 731 levels.

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