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

Surge in dollar and yields drag gold lower; Crude extends weakness.

GOLD

Gold prices eased as the dollar gained ground and the Federal Reserve's July meeting minutes revealed a split among policymakers regarding further rate hikes.

Despite a majority prioritizing the fight against inflation, some members expressed concerns about potential economic risks associated with aggressive rate increases.

This uncertainty has contributed to an over 8% decline in gold prices since early May, when they exceeded $2,000.

Factors such as a rally in U.S. Treasury yields and a robust dollar have dimmed the appeal of gold, which lacks yield. The rise in U.S. interest rates has consequently heightened the opportunity cost of holding gold.

Outlook: We expect gold to trade lower towards 58500 levels, a break of which could prompt the price to move lower to 58420 levels.

CRUDE OIL

Crude oil prices are experiencing ongoing declines due to concerns about China's economic slowdown and potential additional U.S. interest rate hikes, both of which are dampening fuel demand in the world's top two economies.

Worries have intensified with reports of missed payments on investment products by a major Chinese trust firm and a drop in home prices, reflecting a deepening crisis in China's property sector that is undermining economic momentum.

Despite an unexpected second cut in key policy rates by China's central bank, doubts persist about its ability to reverse the downward trajectory of the economy.

The recent release of minutes from the U.S. Federal Reserve's July meeting has further contributed to the downward pressure on oil prices, revealing a continued focus on battling inflation, potentially implying further tightening measures.

Outlook: We expect crude to trade lower towards 6540 levels, a break of which could prompt the price to move lower to 6430 levels.

BASE METALS

Copper prices held steady above seven-week lows, as it has slipped almost 8% since early August, influenced by limited stimulus in major metals consumer China.

Additionally, China's new home prices fell for the first time this year in July, signaling broader economic momentum loss.

In contrast, zinc reached a two-month low due to a rapid 54% surge in LME-registered warehouse inventories over two days, indicating a market surplus amid weak demand.

Amid these trends, LME aluminum prices hit a five-week low, balancing consumer buying against speculator selling due to concerns about excess supply.

Outlook: We expect copper to trade lower towards 716 levels, a break of which could prompt the price to move lower to 712 levels.

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