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Commodity Article :Gold edges higher; Crude climbs higher as supply cuts weigh Says Prathamesh Mallya, Angel One
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Below is "Daily Commodity Article" by Mr. Prathamesh Mallya, DVP Research, Non-Agro Commodities & Currency, Angel One Ltd.
Gold edges higher; Crude climbs higher as supply cuts weigh
GOLD
Gold prices edged higher on Tuesday as weak U.S. economic data raised speculation that the Federal Reserve may reconsider its rate-hike plans.
Traders are eagerly awaiting the minutes of the central bank's last meeting for further guidance. The recent release of disappointing PMIs and the potential hawkish tone of the Fed's June meeting minutes could further support gold.
However, investors currently perceive an 86% likelihood of a 25-basis-point hike in July, which could discourage investment in zero-yield gold.
The upcoming non-farm payrolls data will also be closely monitored following a decline in U.S. manufacturing in June. Gold faces headwinds from expectations of additional tightening, liquidity withdrawal, and persistently high interest rates.
Outlook: We expect gold to trade higher towards 58580 levels, a break of which could prompt the price to move higher to 58650 levels
CRUDE OIL
Oil prices climbed 2% as Saudi Arabia and Russia announced supply cuts for August, countering a weak global economic outlook.
Saudi Arabia extended its voluntary output cut of 1 million bpd, while Russia and Algeria lowered their August output and export levels.
The combined reductions could reach 5.36 million bpd, accounting for 5% of global oil output. However, concerns over sluggish demand in China and Europe, along with anticipated interest rate hikes in the U.S. and Europe, tempered price increases.
The market remained uncertain, overshadowing OPEC+ efforts to tighten supply.
Outlook: Oil prices are likely to be under pressure due to China's weak industrial growth, the weak demand for oil, and central banks' plans to hike interest rates.
BASE METALS
Copper prices declined on Tuesday due to weak manufacturing data indicating poor demand prospects, particularly from China, despite falling inventories suggesting a tighter market.
Surveys of purchasing managers in China's manufacturing sector reflected a loss of momentum in the second quarter with weakened demand.
Manufacturing activity in the euro zone and the United States also slumped in June, reminiscent of the first wave of the COVID-19 pandemic.
The global macroeconomic headwinds and sluggish growth in China continue to exert pressure.
Notably, copper stocks in Shanghai Futures exchange warehouses dropped by 73% since late February.
Outlook: We expect copper to trade higher towards 723 levels, a break of which could prompt the price to move higher to 727 levels.
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Quote on Silver : Silver price falls in recent weeks Says Prathamesh Mallya, Angel One
