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

GOLD

Gold prices were under pressure at the start of the week, owing to interest rate hike expectations and Europe's reduced demand for the precious metal. However, gold rallied sharply, bouncing back on the worst consumer sentiment report on record. Gold ended the week with gains of 1.6 percent.

Gold prices remained relatively under pressure as demand is expected to fall this year, owing to lower jewelry sales and retail investment in China as a result of COVID-19 lockdowns and a slowing economy.

Another hindrance to gold prices was an increase in the treasury yields and a strong US dollar index, which retrained the upside in gold. However, gold prices rebounded in volatile trading on the final trading day of the week, as higher U.S. inflation estimates bolstered predictions of aggressive interest rate hikes.

The yellow metal is typically seen as a safe haven in times of political and economic uncertainty, as well as the best hedge against inflation.

Outlook: Gold prices are expected to stay under pressure as the Federal Reserve is likely to raise policy interest rates by 50 basis points in its upcoming meetings.

CRUDE

Crude continued to move higher, extending the gaining momentum to 3rd straight week, ending with gains of 1.8 percent.

Prices initially came under pressure after Saudi Arabia and other OPEC+ members agreed to boost output by 648,000 barrels per day in July and August, or 50% more than previously projected. Since the EU imposed the sixth round of sanctions, most purchases of Russian oil and goods will be phased out by the end of 2022 or early 2023, probably worsening shortages.

The easing of lockdowns in Shanghai, China, which is projected to boost oil consumption in the coming weeks, was another factor that helped boost prices. Oil prices stayed near 13-week highs, bolstered by strong demand in the world's top consumer, the United States, and demand in China is expected to increase as COVID-19 curbs in major cities are eased.

Furthermore, fresh fears of further COVID-19 lockdown measures in Shanghai outweighed the steady demand for fuels in the world's largest consumer, the United States, putting downward pressure on prices.

However, the Strategic Petroleum Reserve fell by a record amount, according to EIA data, as refiners ramped up production to pre-pandemic levels. The latest economic data in the United States shows that growth has slowed since last year's amazing post-pandemic recovery, but it still has a lot of momentum, which will keep oil demand high in the short term.

Outlook: As oil trades near 13-week highs, prices are expected to remain elevated on the back of steady demand from the US, and the refiners have scaled up their production to pre-pandemic levels.

BASE METALS

Post witnessing a disappointing performance in the previous week, the base metals pack extended the weakness into the subsequent week with Nickel being the top loser, down over 8 percent.

Metals pack began the week on a positive note as COVID-19 limitations in top metals consumers have been lifted and the anticipation of a revival in demand in China boosted metals prices.

Aluminum prices fell to their lowest levels in over six months this week, while copper prices fell after reaching five-week highs, as investors worried about the impact of weak economic development on metals demand following China's resumed COVID-19 lockdowns and the likelihood of higher interest rates.

Prices rose earlier this week on the strength of expectations of a rebound in demand as China's commercial powerhouse was getting back to normalcy in recent days following a two-month merciless shutdown.

Another factor weighing on metal prices was the US dollar index, which was at a two-week high as the Federal Reserve is expected to raise its key interest rate by 50 basis points each in the upcoming meetings in June and July, and the European Central Bank also announced that interest rates would be raised by 25 basis points in July for the first time in over a decade.

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