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

Strong dollar drags gold prices lower; Oil continues to extend gains.

GOLD

Post ending the previous week on a lower note, gold prices are heading towards yet another week of underperformance. On Wednesday, the yellow metal slipped nearly a percent lower.

The strong dollar, which reached two-month highs, reduced some safe-haven flows into bullion in response to the growing prospect of a US government default.

The minutes of the US Federal Reserve's most recent meeting indicated that the rate-hike campaign will likely stall in June.

Bullion was trading around one-and-a-half month lows hit last week, as increasing interest rates raise the opportunity cost of keeping non-interest-bearing gold.

Outlook: Gold prices are projected to remain under pressure as the US dollar has surged towards 2-month highs, limiting the upside

CRUDE

Amidst the weakness in metals, crude prices on the other hand are having a favoruable time, as the benchmark crude indices continue to gain.

Oil prices were bolstered by a warning from Saudi Arabia's energy minister against short-sellers speculating on a drop in oil prices.

The Energy Information Administration reported an unexpected huge drop in US crude oil stockpiles during the previous week, which provided additional support.

However, oil prices plummeted as Britain's stubbornly high inflation rate fell by less than predicted last month, increasing the prospect of additional interest rate hikes.

Outlook: Crude prices are expected to continue to go upward due to forecasts that OPEC+ will cut output and possibly increase demand in the impending peak demand season in the United States.

BASE METALS

On Wednesday, the base metals pack witnessed sharp selling pressure, as metals ended with deep cuts of over 2-3 percent.

On Wednesday, copper prices fell below $8,000 a tonne for the first time since November, extending this week's decline due to weak Chinese demand and concerns about global economic development.

Hopes for increased Chinese demand have now dimmed, with recent dismal Chinese data highlighting a mixed picture for the world's largest copper consumer.

Outlook: We expect copper to trade higher towards 706 levels, a break of which could prompt the price to move higher to 710 levels.

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