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

GOLD

Gold this week managed to snap the weekly losing streak, as the yellow metal ended the week with a one percent gain. Since the dollar has weakened from 20-year highs, which had been holding down bullion prices in recent weeks, improving demand sentiments among buyers.

The US inflation data, which were just released and are at 4-decade highs, may prompt the Fed to unexpectedly raise interest rates by 100 basis points. However, two of the Fed's most hawkish policymakers hinted that the Fed would likely opt for a 75-basis point increase at the upcoming meeting.

To combat the record-high inflation, the ECB increased interest rates this week for the first time in more than a decade. Although gold is regarded as a hedge against inflation, investors are turning away from the non-yielding yellow metal as a result of rising interest rates.

Outlook: We expect gold to trade higher towards 51070 levels, a break of which could prompt the price to move higher to 51470 levels.   

CRUDE

The pressure from the previous week extended into the further week, as crude prices dropped 7.7 percent. However, it did begin the week on a strong positive note but succumbed to the selling pressure wiping away the early gains.

Fears that the central bank will hike interest rates to control the rising inflation, which might trigger a recession and result in tighter global supplies due to the loss of Russian barrels since the west's sanctions, which continued to weigh on the price of oil.

Sluggish demand from the US after record gas prices saw an 8% drop in consumption compared to the last year in the midst of the peak summer driving season. On the other hand, a major Canadian oil export route was running at a reduced rate for the third day in a row as maintenance work was ongoing, which increased supply concerns.

Outlook: We expect crude to trade lower towards 7550 levels, a break of which could prompt the price to move lower to 7410 levels.   

BASE METALS

The industrial mets pack witnessed a rebound in the previous week. Except for LME Zinc, all the other metals ended on a positive note, with LME Nickel being the top gainer.

A pullback in the dollar assisted the metal prices to recover from their lows. A weaker greenback makes dollar-denominated metals less expensive for other currency holders. Additional stimulus measures from China, the world's largest purchaser of metals, would be another aid that would limit further decline.

Recently, the metal prices were under pressure as the US dollar rose to 20-year highs which hinted at a recession given the sky-high inflation and rapidly increasing rates coupled with slowing economic growth which kept the gains in check.

The US Fed's interest rate decision is the next catalyst that investors will watch for after the ECB raised interest rates for the first time in more than ten years. According to two of the Fed's hawkish members, another 75 basis point increase is likely.

Outlook: US Fed’s rate hike anticipation to be a major headwind, which would limit the gains in metals.

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