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

GOLD

After ending the previous two sessions on a marginally positive note, spot gold concluded Wednesday's trading session on a lower note, down 0.86 percent, ending at 1696.4$ per ounce.

As a result of the strong US dollar and the likelihood of further interest rate increases by major central banks to tackle growing inflation, gold prices plummeted to their lowest levels in almost a year.

On Thursday, the European Central Bank will raise interest rates for the first time in 11 years, a bigger-than-expected move that is becoming more likely as officials worry about losing control of the rising consumer prices. Whereas, the US Federal Reserve is widely expected to raise interest rates by 75 basis points at its policy meeting next week. 

The UK's June inflation rate rose to a 40-year high, increasing the likelihood that the Bank of England will raise interest rates by half a percentage point the following month. Even though gold is seen as an inflation hedge, rising interest rates increase the opportunity cost of holding bullion, which pays no interest.

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

Oil prices fell on Wednesday's session, as demand concerns outweighed tight global supply after U.S. government data showed tepid gasoline demand during the peak summer driving season. Benchmark crude was down 0.40 percent and NYMEX was down 1.88 percent.

As a result of tighter global supplies due to the loss of Russian barrels as a result of the country's invasion of Ukraine and recessionary concerns that could reduce energy consumption, oil prices have been volatile recently.

However, one of Canada's main oil export routes, the Keystone pipeline, was operating at lower rates for a third day on Wednesday, according to operator TC Energy, adding to supply worries as repairs continued on a third-party power facility in South Dakota.

Outlook: We expect crude to trade higher towards 8140 levels, a break of which could prompt the price to move higher to 8250 levels.   

BASE METALS

The base metals pack witnessed saw an uptick on Wednesday's session, as on the LME, all the metals ended on a positive note, and on the MCX, except for Nickel all other metals ended in the positive territory.

On Wednesday, as concerns over Europe's gas supply subsided, the price of copper and other base metals continued to rise from multi-month lows, boosting risk appetite and the world equity markets.

Metal prices had fallen recently as the current US dollar rose to 20-year highs and several nations were looking ahead to a recession by sky-high inflation and rapidly rising interest rates. The recent decline in the dollar has, however, assisted metals in rising from their lows.

Outlook: We expect copper to trade higher towards 637 levels, a break of which could prompt the price to move lower to 648 levels.

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