IGI Logo

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

GOLD

Gold prices rose slightly in the previous week, recouping the minor drop seen the previous week.

This week, bullion prices ended the quarter and month on a higher note, as expectations that the Fed will consider a rate-hike pause in the aftermath of the failure of two US regional banks.

The weaker US dollar index increased demand for gold. However, as the banking crisis has subsided, solid buying interest has waned.

Markets anticipate that the Fed will leave interest rates unchanged in May. The opportunity cost of holding non-yielding gold rises as interest rates rise.

Outlook: We expect gold to trade lower towards 59070 levels, a break of which could prompt the price to move lower to 58680 levels.

CRUDE

Crude prices continues to build up on the momentum from the previous week, as benchmark NYMEX index posted yet another strong week, gaining nearly 4 percent. 

The reduction or shutdown of several oilfields in northern Iraq's semi-autonomous Kurdistan region has been a major tailwind for the rise in crude prices.

Iraq was forced to halt approximately 450,000 barrels per day (bpd) of crude exports from the Kurdistan region via a pipeline that connects the country's northern Kirkuk oil fields to the Turkish port of Ceyhan

These suspensions of some exports eventually raised concerns about tightening supply, especially given signs of strong Chinese demand and a drop in inventories of approximately 6.1 million barrels.

As Russia reduced crude oil output by less than anticipated in the first three weeks of March, these factors assisted in reducing pessimistic sentiment.

Outlook: We expect crude to trade higher towards 6330 levels, a break of which could prompt the price to move higher to 6430 levels.

BASE METALS

The base metals pack largely ended on a positive note, except for Lead, which was the only losing metal of the week. 

Copper prices have fallen from seven-month highs in January, but they are still significantly higher than the low of $6,955 set last year. Copper prices rose marginally as investors braced for a credit crunch, which would stifle economic growth and metals demand.

Despite the sale of failed Silicon Valley Bank (SVB) to a regional US peer, China, the world's largest consumer, is increasing its demand for copper. However, bank failures have increased the risk of lending.

In March, China's factory activity increased at a slower rate, indicating that the economy's recovery is uneven due to weak global demand and a property slump.

Aside from copper, metals such as nickel experienced a strong rebound in prices, recovering losses and ending the week unchanged. Nickel prices fell 28% in seven weeks as a result of concerns about weak demand and rising output in Indonesia.

Outlook: Given China's conflicting signals as the world's largest customer and the recent slowdown in manufacturing activity, metal prices are anticipated to decline.

Please refer disclaimer at https://www.angelone.in/ 
SEBI Regn. No.: INZ000161534

Above views are of the author and not of the website kindly read disclaimer