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Below is Commodity Article by Mr. Saish Sandeep Sawant Dessai, Research Associate- Base Metals, Angel One Ltd

Broad-based sell-off was witnessed over anticipation of the Fed’s rate hike amid rising inflation

GOLD

After having witnessed a positive closing in the previous session, the price of gold was back again in the negative territory as it ended with a cut of 1.49 percent, ending at 1709.4$ per ounce,

After a one-day pause, gold prices resumed their downward trend. The metal is now headed for yet another weekly fall due to a persistent rise in the dollar and concerns over hasty increases in U.S. interest rates.

The dollar was hovering near 20-year highs, which restrained demand from customers holding other currencies for bullion priced in the greenback. A strong dollar sent gold down nearly 2% in the previous session.

Although the benchmark 10-year Treasury yield inched lower on Thursday, two of the Fed's hawkish officials indicated they preferred another 75 basis-point increase in interest rates at this month's policy meeting.

Outlook: We expect gold to trade lower towards 49790 levels, a break of which could prompt the price to move lower to 49370 levels.   

CRUDE

Post concluding the previous session on a mixed note, the benchmark indices ended Thursday's session on a negative note. The Brent ended 2.52 percent lower and the NYMEX ended 0.54 percent lower.

On Thursday, oil prices declined due to a lack of clarity over how aggressively the U.S. Federal Reserve will raise interest rates to battle rising prices.

On Thursday, two of the Fed's hawkish policymakers expressed their support for a 75-basis point rate increase at the forthcoming meeting rather than the larger increase that the market was expected to reflect the increasing inflation.

The rate hike uncertainty, along with weak economic data caused both benchmark contracts briefly fell below the closing on February 23, the day before Russia invaded Ukraine.

Outlook: Crude is expected to trade lower on the back of the strong dollar, which is at 20-year highs amid rising inflation which leaves the US Fed to hike interest rates in the upcoming meeting.

BASE METALS

The industrial metals on Thursday ended on a lower note, as all the metals on the LME as well as on the MCX ended on a negative note, with LME Nickel being the top loser.

On Thursday, industrial metals prices dropped significantly as the market anticipated swift increases in interest rates that would limit economic development and lower the demand for metals.

Investors wagered that the biggest US inflation since 1981 will result in a supersized 1% US interest rate hike this month, which caused oil prices and equity markets to decline and the currency to rise to a 20-year high. On Thursday, however, two of the Fed's more aggressive policymakers made it known that they supported a 75-basis point rate increase at the forthcoming Fed meeting rather than the larger increase that the market was anticipating.

Recessions are now widely anticipated globally and in the United States. A strong dollar makes metals that are priced in the dollar, makes it costlier for buyers holding other currencies and so can reduce demand.

Global growth is sluggish. The European Commission lowered its predictions for the eurozone this year and the following year. In the past two days, at least five central banks have tightened their monetary policies.

In China, the biggest metals consumer, the government is once more committed to boosting the economy, but the country's continued adherence to a zero-COVID policy has dampened demand for metals.

Outlook: We expect copper to trade lower towards 607 levels, a break of which could prompt the price to move lower to 597 levels.

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