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

GOLD

On Monday, the yellow metal slipped lower, witnessing a pause in the strong momentum seen over the last few sessions. Bullion concluded the day with a 1.64 percent cut, ending at 1768.4$ per ounce.

The pullback in gold came as the dollar rebounded on bets that strong economic data may prompt bigger interest rate hikes by the Federal Reserve.

Data from the US showing the services industry activity that unexpectedly picked up in November, prompting speculation the Fed may lift interest rates more than recently projected. USD/ that the Fed may lift interest rates more than recently projected.

Higher interest rates tend to reduce the appeal of gold as they increase the opportunity cost of holding the non-yielding metal. he European Central Bank is anticipated to increase interest rates by 50 basis points the following week.

Outlook: We expect gold to trade lower towards 53220 levels, a break of which could prompt the price to move lower to 53010 levels.

CRUDE

The benchmark crude indices slipped on Monday, as Brent and NYMEX ended with over 2 percent cut, following US service sector data, which might raise worries that the Federal Reserve could continue its aggressive policy tightening path.

The report dispels expectations that the Fed would scale back the rate increases it has recently announced in response to recent signals of declining inflation.

OPEC and its allies decided on Sunday to stick to its October plan to cut output by 2 million barrels per day (bpd) from November through 2023, limiting the downside for crude. 

Outlook: We expect crude to trade lower towards 6270 levels, a break of which could prompt the price to move lower to 6130 levels.

BASE METALS

Base metals on Monday concluded on a mixed note, as Nickel, Aluminium and Copper ended on a lower note on the LME, whereas, on the MCX, only copper ended lower.

Despite the decline, copper prices hit three-week highs on Monday as expectations for increased demand were raised by loosening COVID regulations in China, the world's largest customer.

In the meantime, the dollar gained when US data revealed that factory orders exceeded expectations in October and that service sector activity unexpectedly increased in November.

A stronger US dollar increases the cost of dollar-priced metals for holders of other currencies, which could reduce demand.

Outlook: Metals are likely to be under pressure, as the US Fed would likely hike the interest rate coupled with a strong dollar. However, easing of Covid-19 norms in China might see the downside risk limited.

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