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On Wednesday, gold snapped its losing momentum, as the yellow metal ended on a positive note, gaining 0.55 percent to end at 1735.2$ per ounce.

Gold prices rose as Treasury yields and the dollar fell, leading to an increase in gold prices. However, the demand for gold may be harmed further as the Federal Reserve considers a more aggressive interest rate hike this month, following data showing that US inflation soared to the highest level since November 1981 in June.

However, the dollar remains steady at 20-year highs, which may limit gold's upside, making greenback-priced gold less appealing to buyers holding other currencies.

Although gold is regarded as an inflation hedge, rising interest rates drive investors away from the non-interest-paying metal.

Outlook: We expect gold to trade higher towards 51230 levels, a break of which could prompt the price to move higher to 51630 levels.   

CRUDE

The benchmarks in the previous session concluded the day on a mixed note, as Brent settled with a 0.95 percent cut and NYMEX settled 0.48 percent higher.

Oil prices fell as investors increased their bets on the US Federal Reserve raising interest rates, which would lessen the rising inflation and curb oil demand. The Federal Reserve is expected to increase interest rates by 100 basis points this month in response to a grim inflation report that showed rising prices accelerating.

The war in Ukraine, decreased GDP projections for 2022 and 2023, and reduced demand owing to rising prices, raising the risk of winter energy shortages, according to the European Commission.

Also popular as a safe haven asset, the dollar saw a surge in investor interest. On Wednesday, the dollar index reached a 20-year high, making purchases of oil more expensive for owners of other currencies.

Outlook: Given the skyrocketing inflation numbers which are paving the way for a more aggressive policy stance, as anticipation that the Fed might hike the interest rate by 100 basis points.

BASE METALS

On Wednesday, the industrial metal pack witnessed a mixed set of action, as except for Lead, all the other metals ended lower on the LME, whereas, on the MCX, the Nickel and Zinc ended with a cut, and the rest all the other metals ended on a positive note.

Industrial metal prices dropped as predictions of aggressive monetary policy tightening, which would hinder global economic development and metal demand, increased in response to the United States' increasing inflation. The greatest increase in US annual consumer prices since 1981, as inflation, jumped to  9.1 percent in June.

Prices were boosted by improving economic statistics from China, the world's largest consumer of metals, as exports increased after the COVID-19 lockdowns at the quickest rate in five months. China's imports of copper increased by 15.5% in June compared to a month earlier as demand increased after the COVID-19 lockdowns that had hampered factory operations.

Outlook: We expect copper to trade higher towards 641 levels, a break of which could prompt the price to move higher to 652 levels.