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Below is Gold Article by Mr. Prathamesh Mallya, DVP Research, Non-Agro Commodities & Currency, Angel One Ltd.     

GOLD

Gold prices declined to a near one-week low following the release of a better-than-expected U.S. private payrolls report. This report has heightened expectations for additional rate hikes by the Federal Reserve, thereby increasing Treasury yields.

The benchmark U.S. 10-year Treasury yields have reached a level not seen in over four months, while the yield on the two-year U.S. Treasury note has reached its highest level since June 2007.

Furthermore, the data indicates a moderate increase in the number of Americans filing new claims for unemployment benefits, signaling a gradual improvement in labor market conditions.

Consequently, investors are currently anticipating a 92% probability of a 25-basis-point rate hike in July. These elevated interest rates act as a disincentive for investing in gold, which yields zero returns, thereby exacerbating the decline in its value.

Outlook: We expect gold to trade lower towards 58300 levels, a break of which could prompt the price to move lower to 58230 levels.

CRUDE Oil

Crude oil prices were poised to register gains for the week, with concerns over higher U.S. interest rates being counterbalanced by indications of constrained supply.

There was a larger-than-expected decline in U.S. crude stocks due to robust refining demand, and Saudi Arabia and Russia announced further output reductions for August.

However, oil prices were tempered by expectations of a U.S. interest rate hike and a moderate uptick in unemployment claims. Elevated rates have the potential to impede economic growth and diminish oil demand.

Nonetheless, OPEC is anticipated to maintain an optimistic perspective on oil demand growth for the following year.

Outlook: China's weak industrial growth, along with weak oil demand and the intention of central banks to raise interest rates, is expected to exert downward pressure on oil prices.

BASE METALS

Base metals, particularly copper, experienced downward pressure as a result of a weak global economic growth outlook and sluggish demand from China, the leading consumer.

The initial optimism surrounding copper's post-COVID rebound in 2023 diminished as China's recovery demonstrated less commodities-intensive than anticipated.

BofA Global Research has revised its 2023 copper price forecast downward by 6.8%, attributing this adjustment to the slow normalization of activity in China, tighter monetary policy, and a global manufacturing recession.

Notwithstanding these challenges, copper is projected to enjoy relatively stronger support compared to other base metals in the latter half of the year, primarily due to its pivotal role in facilitating the green energy transition.

Outlook: We expect copper to trade lower towards 710 levels, a break of which could prompt the price to move lower to 705 levels.

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