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

GOLD

Prices for the yellow metal concluded the week on a negative note, en route on its way to another weekly decline after the demand for the non-yielding asset weakened due to a stronger dollar and impending interest rate hikes.

Another hindrance was, that the second-largest consumer of gold in the world, India, increased the basic import duty on gold from 7.5 percent to 12.5 percent, which might dampen the demand.

Gold prices have fallen about 6% this quarter to their lowest level since the first quarter of 2021 as a result of central banks' aggressive measures to tame raging inflation and a surging U.S. dollar that is edging closer to recent two-decade highs. This kept gold under pressure for the entire week.  

A stronger dollar makes gold more expensive for buyers using foreign currencies. However, after dropping to six-week lows, gold prices did see an uptick, as the treasury yields slipped below 2-week lows.

Outlook: Gains in gold prices are expected to remain capped given the strong dollar and anticipation of a rate hike by the US Federal Reserve.

CRUDE

NYMEX crude gained over 2 percent on Friday, due to supply disruptions in Libya and anticipated shutdowns in Norway as 74 offshore workers prepare to go on a strike.

The up move in the crude prices partially offset some of the losses, yet it ended with a 1 percent cut. For June month, both the benchmarks ended lower for the first time since November. During the week prices slipped over 3 percent after the OPEC+ affirmed that it would stick to its planned oil output hikes in August as mounting concerns about the health of the world economy would continue to grow.

Despite the fact that prices have risen due to constrained supplies globally, there are concerns that the firm will not be able to pump more crude. US crude stocks decreased in the most recent week despite refiners expanding their operations and industry production hitting its highest level in more than two years in response to a restricted global supply and high prices.

The rising dollar, which makes oil more expensive for buyers using other currencies, was another reason that kept prices under pressure. As pandemic lockdowns in Beijing and Shanghai were lifted, prices did find some support, which is likely to improve the demand for fuel.

Outlook: Prices are expected to remain elevated as the perceived tightness in the oil supply is lending resilience to oil prices.

BASE METALS

Weakness persisted in the base metals, as the whole pack continued the losing momentum for yet another week. LME Zinc was the top losing metal, ending with a cut of 8.7 percent.

Copper prices slumped on Friday to their weakest in 17 months and have registered their worst quarter since 2011, falling 20.4%, as inflation and factory data fueled concerns that central bank tightening will send economies into a recession and hurt demand for commodities.

Even after some encouraging news from the biggest consumer of metals, China, sentiment remained low after manufacturing activity grew at its quickest pace in 13 months in June.

However, the US industrial activity slowed more than anticipated in June, hitting a two-year low. the situation in the Eurozone remained bleak, this gives the ECB more leeway to raise interest rates for the first time in more than ten years. Also weighing on metals was a firmer dollar makes commodities priced in dollars more expensive for buyers using other currencies.

Outlook: We expect copper to trade lower towards 671 levels, a break of which could prompt the price to move lower to 661 levels.

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