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

GOLD

The yellow metal continued to extend the marginal gains into the second straight day, as it inched higher, ending at 1711.1$ per ounce.

As investors awaited important interest rate hike decisions from major central banks, which could provide a clearer view for bullion, gold prices remained stable on Tuesday due to a decline in the US dollar, which offset pressure from rising bond yields.

Despite being at high levels, the dollar fell for a fourth straight session, making bullion priced in the greenback more affordable for buyers using foreign currencies.

At their meeting on Thursday, European Central Bank policymakers may decide to increase interest rates by 50 basis points in an effort to control record-high inflation.

Outlook: We expect gold to trade lower towards 49880 levels, a break of which could prompt the price to move lower to 49460 levels.   

CRUDE

Benchmark indices ended on a mixed note, with Brent down 3.02 percent and NYMEX up 1.58 percent. In addition to pressure from attempts by global central banks to contain inflation, oil prices were also under pressure from anticipated increases in U.S. crude inventories as demand slowed.

As buying interest emerged as the US dollar's respite, oil prices witnessed an uptick. However, uncertainty looms over as to what the Fed's and other central banks' stance be in the wake of rising inflation.

Oil prices whipsawed in the previous session, as it is caught between supply fears due to Western sanctions on Russia and pressure from central bankers who were signaling that they would hike interest rates to fight inflation.

Outlook: Crude prices are expected to remain under pressure as the dollar hovers near 20-year highs amid rising inflation which leaves the central banks to hike interest rates in the near short term.

BASE METALS

Post witnessing a bounceback, the base metals pack came under pressure as all the metals on the LME ended on a lower note, whereas on the MCX, except for Nickel, all the others ended lower.

Although the dollar witnessed a pullback on Tuesday, demand worries due to slowing economic growth kept gains in check. However, the downside might be limited as hopes of more stimulus from top consumer China would support the metal prices.

The U.S. dollar continued to retreat on Tuesday, as the euro extended its gaining momentum on relief Europe might be able to avoid the worst fears concerning energy shortages. A weaker greenback makes dollar-denominated metals less expensive for other currency holders.

Whereas, the top metal consumer China kept its monthly benchmark lending rates for corporate and household loans unchanged, matching market expectations. 

Outlook: We expect copper to trade lower towards 616 levels, a break of which could prompt the price to move lower to 606 levels.

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