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

GOLD

On Wednesday, gold prices fell 0.75 percent after ADP Research Institute reported the weakest growth in private payrolls since 2021; it closed at 1710.7$ per ounce.

Following Fed Chair Jerome Powell's hawkish statements last week, gold and other metals have dropped considerably in the last three days. Investors expect the Fed to raise interest rates by 75 basis points later this month.

Gold has extended its losses since Fed Chair Jerome Powell's address last week, in which he emphasized the central bank's commitment to containing inflation. Gold was on track for its fifth consecutive monthly decline, the biggest losing streak in four years.

Outlook: We expect gold to trade lower towards 49970 levels, a break of which could prompt the price to move lower to 49550 levels.

CRUDE

Oil prices plunged on Wednesday, as both benchmarks ended with a sufficient cut. Bent ended 3.17 percent lower, whereas NYMEX ended 2.28 percent lower.

Fears of an imminent oversupply led to pressure on crude prices, as did concerns that the global economy could slow further with renewed COVID-19 restrictions in China amidst reports of a likely agreement with Iran paving the way for sanctions relief and the potential restoration of 1 million barrels per day of Iranian crude oil supplies.

However, output in both OPEC and the US has reached its highest level since the beginning of the coronavirus outbreak. In the most recent month, OPEC output was 29.6 million barrels per day (BPD), while US output was 11.82 million BPD, the highest since April 2020.

The resurgence of the US dollar, as well as a surprise increase in crude oil stocks in the US, compounded the gloomy sentiment.

Outlook: The unexpected increase in crude oil inventories, along with a strong dollar, would limit crude price advances.

BASE METALS

The base metals group saw weakness on Wednesday, with all metals ending lower except for LME Nickel. The metals fell after new data from the world's main economies indicated sluggish global economic performance, lowering the outlook for industrial metals demand.

Factory activity in China, the world's largest metals consumer, fell amid COVID-19 flare-ups and a deep property crisis. China's official manufacturing PMI for August was somewhat higher than expected, but it dropped for the second month in a row.

In August, inflation in the eurozone reached a new high of 9.1%, exceeding expectations and bolstering the case for additional aggressive rate hikes by the European Central Bank.

On the supply side, as the temperature in Sichuan has lately dropped and rainfall has increased, the province's power crisis has been alleviated, and local aluminum production has resumed. As the global energy crisis worsens, overseas aluminum smelters face the prospect of reducing production.

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