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

GOLD

The pressure witnessed in the previous session was extended further in the subsequent session as prices of the precious metal ended 0.59 percent lower, ending at 1807.1$ per ounce.

Gold prices fell to one-month lows as investors are awaiting the Federal Reserve's announcement of a potentially aggressive interest rate hike to combat inflation amid rising fears of an oncoming recession.

Investors have drastically increased their wagers that the Federal Reserve will raise interest rates by 75 basis points (bps) rather than 50 bps later in the day, fueling a major selloff across global markets.

Benchmark US 10-year Treasury yields have risen to a multi-year high, placing greater pressure on gold. The opportunity cost of storing bullion, which pays no interest, rises as short-term interest rates and bond yields rise. For buyers holding foreign currencies, a higher dollar makes greenback-priced bullion more expensive.

Outlook: Gold prices are expected to remain under pressure, given the anticipation that the Fed might hike the interest rate with an aggressive approach.

CRUDE

Crude prices on Tuesday ended on a mixed note, as Brent held onto its gains, ending 2.84 percent higher, whereas the NYMEX crude ended 1.65 percent lower.

Oil prices fell on Wednesday due to concerns over fuel demand ahead of a U.S. Federal Reserve meeting which is expected to see the central bank to hike rates by at least 75 basis points to combat inflation.

Surging inflation has led investors and oil traders to brace for a big move by the Fed, what could be the largest U.S. interest rate hike in 28 years.

On the demand side, just as the restrictions were being eased in the Chinese cities of Shanghai and Beijing, renewed concerns about China's latest COVID outbreak, traced to a 24-hour bar in Beijing, have raised fears of a new phase of lockdowns.

In its monthly report, OPEC maintained its projection that global oil consumption will surpass pre-pandemic levels in 2022; but, the producer's organization expects demand growth to stall in the coming year as rising oil prices help push up inflation and act as a drag on the global economy.

Tight supply, which has been exacerbated by a decline in exports from Libya amid a political turmoil that has impacted output and ports, is offering some support to prices.

Outlook: We expect crude to trade lower towards 9290 levels, a break that could prompt the price to move lower to 9150 levels.

BASE METALS

The industrial metals pack extended the weakness into the Tuesday session, as all the metals concluded the day on a negative note.

On Tuesday, aluminum prices fell to their lowest level in seven months, as investors were concerned that renewed lockdowns in top customer China, as well as a potential global recession, would reduce demand for metals. There is a general lack of risk appetite, which has caused the metals to come under fire due to recessionary risks to demand. Additionally, sentiments appear to be anxious ahead of the FOMC meeting later in the day. Eroding inflation data and fast-changing views in financial markets have opened the door to a larger-than-expected three-quarter-percentage point interest rate increase.

Meanwhile, renewed COVID-19 lockdowns have reignited concerns about demand in China, the world's largest metals consumer. Authorities in China's capital warned on Tuesday that a surge in COVID-19 cases linked to a 24-hour bar was critical and that the city of 22 million people was racing against time to contain its most serious outbreak since the pandemic began.

However, declining stockpile levels and restricted supply offset some metals' losses. The inventory levels held by London and Shanghai exchanges are still on the weak side. However, weighing on the market, the dollar index bounced to a fresh two-decade high, making greenback-denominated metals more expensive for buyers using other currencies.

Outlook: We expect copper to trade lower towards 742 levels, a break of which could prompt the price to move lower to 732 levels.   

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