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

GOLD

Gold prices traded higher during the start of the day, however, going further, the yellow metal started to lose its hold, giving up its gains and ending on a marginally negative note. Gold ended 0.17 percent lower to close at $1819.7 per ounce.

Gold inched down on Tuesday, giving up its gains as prolonged dollar strength kept investors away from greenback-priced bullion. The US dollar witnessed sharp gains on Tuesday, which made gold less appealing to buyers using foreign currencies. Benchmark US 10-year Treasury yields eased, providing some support to gold.

Between pressure from potential increases in interest rates and support from recession worries, gold prices have been trapped.

In order to lower the rising inflation, US Federal Reserve has hinted at an interest rate hike. Despite the fact that gold is seen as a hedge against inflation, owning the metal, which pays no interest, raises the opportunity cost of holding bullion.

Outlook: We expect gold to trade lower towards 50380 levels, a break of which could prompt the price to move lower to 49960 levels.   

CRUDE

Crude prices extended their winning momentum during Tuesday's session, as Brent ended with gains of 1.38 percent and NYMEX Crude gained 2 percent.

The increase in crude prices was attributed to the expectation that the global supply shortage will persist because there is little room for large producers like Saudi Arabia to increase production.

Both Brent and NYMEX rose nearly 2%, as concerns over tight global supply exceeded worries about a potential future recession slowing demand, both Brent and NYMEX gained nearly 2%. The G7 economic countries' decision to investigate options for capping the price of Russian oil further underpinned the market sentiment.

Outlook: Crude prices are expected to remain elevated given the supply shortages amidst strong demand.

BASE METALS

On Tuesday, the Base Metals pack continued to witness a mixed set of action. On the LME, except for Zinc, all the other metals ended on a negative note, whereas on the MCX, Except for Lead, all the other metals ended on a positive note.

Copper prices on Tuesday saw a decline in copper prices as the dollar strengthened and concerns about the recession resurfaced, although some support came from expectations for increased demand as top consumer China eased its COVID-19 quarantine measures.

A stronger dollar increases the cost of dollar-priced metals for holders of other currencies, which tends to reduce demand.

Industrial metals demand and manufacturing activity have both been impacted by China's strict lockdowns. However, this week's release of the PMI numbers will provide insights into the demand for industrial metals in China.

Outlook: Base metals are expected to remain under pressure given the strengthening of the US Dollar and fears of the recession that will impact the demand for metals.

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