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

GOLD

Gold prices came under pressure on Tuesday, as it ended with a 0.31 percent cut at 1832.6$ per ounce.

Gold eased in the previous session as the dollar recovered from the day lows, while Treasury yields continued to firm up, but prices relatively remained sideways as investors awaited new clues from the top central banks' monetary policies, especially from the U.S. Federal Reserve.

It is expected that the Fed will raise interest rates by another 75 basis points in July, followed by another 50 basis points in September, and won't scale back to a quarter percentage point anytime soon. Since the dollar gained strength, gold bullion priced in dollars becomes more expensive for buyers using foreign currencies.

Benchmark  US Treasury yields witnessed an uptick, reducing the appeal of gold. The opportunity cost of owning gold, which produces no interest, rises as interest rates and bond yields rise.

Outlook: We expect gold to trade lower towards 50320 levels, a break of which could prompt the price to move lower to 49900 levels.  

CRUDE

Crude witnessed a bounceback on Tuesday, as Brent crude ended with a 0.59 percent gain, whereas NYMEX Crude was up 0.99 percent, as prices traded largely in a range.

Despite concerns about inflation, demand is still recovering to levels prior to the COVID, and supply is expected to lag demand growth, keeping the market tight. The US President will propose temporarily suspending the 18.4-cent per gallon federal gas tax in an effort to lower oil costs.

In response to pressure from the White House to lower petrol costs as the firm posts record profits, seven oil firms are scheduled to meet with US President Joe Biden this week.

Since European oil sanctions against Russia for its invasion of Ukraine have not yet taken effect, meaning the supply will only become tighter. To date, the amount of Russian fuel supplied to Europe has decreased only a little since the crisis started.

Outlook: We expect crude to trade lower towards 8450 levels, a break of which could prompt the price to move lower to 8310 levels.

BASE METALS

The industrial metals continued to witness a mixed bag of activity, with all metals on the LME ending on a good note aside from lead, which ended marginally negative, while only nickel and lead were in the negative on the MCX, where all other metals concluded on a positive one.

Concern over anticipated shortages brought on by declining stockpiles and potential decreases in smelter output due to high energy prices caused a spike in zinc prices on Tuesday.

On Monday, LME zinc fell to its lowest level in more than a month, losing 20% over the previous two months along with declines in other industrial metals due to worries about a slowdown in China, the world's largest consumer of metals and potential global recession.

Outlook: We expect copper to trade lower towards 734 levels, a break of which could prompt the price to move lower to 724 levels.   

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