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

GOLD

Gold prices witnessed a volatile session on Monday, however, concluded the day on a relatively flat note, with a marginal loss of 0.19 percent to close at 1822.7$ per ounce.

The price of the bullion witnessed an uptick Since the G7 countries are adding gold to reinforce their sanctions against Russia. Further aid came as recession fears lingered and the dollar declined, while investors kept an eye on the European Central Bank's meeting in Portugal for any hints about potential policy changes.

However, the up-move in gold remained capped as U.S. 10-Year Treasury yields witnessed an uptick. The opportunity cost of owning gold, a non-yielding asset, increases with increased interest rates even if it is considered a hedge against inflation spikes and economic risks.

Outlook: We expect gold to trade lower towards 50210 levels, a break of which could prompt the price to move lower to 49790 levels.   

CRUDE

On  Monday, crude prices snapped their losing streak, as Brent ended with gains of 1.15 percent and the NYMEX ended with 1.81 percent gains.

Oil prices traded higher on Monday in a volatile session as investors waited for any moves against Russian oil and gas exports that might come out of a meeting of leaders of the G7 nations.

While oil prices have remained steady due to robust demand and a supply shortage, the market is concerned by the possibility of even tighter supplies as recession fears and anticipation of more interest rate hikes have caused volatility and risk aversion.

Pandemic lockdowns in Beijing and Shanghai have been eased by China, which will increase demand and boost fuel prices. However, the markets have been further tightened by supply shortages due to sanctions on Russian oil, little spare capacity among big producers, and worries of new outages in Libya.

Ecuador announced it could fully halt oil production within a few hours amid anti-government rallies in which at least six people have died, compounding the supply problems. Even as U.S. President Joe Biden's administration releases more than a million barrels per day from emergency oil reserves, U.S. crude stockpiles decreased to their lowest levels since 2004.

Outlook: Crude oil is expected to trade higher given the supply crunch, while the demand remains strong.

BASE METALS

The base metals pack witnessed a mixed set of action on Monday, as all the metals on the LME ended on a positive note except for Zinc, whereas, except for Lead which ended on a negative note, all the other metals ended with positive gains.

Given the improvement in sentiment following China's relaxation of COVID restrictions and the dollar's decline, copper prices saw some relief as the metal price stabilized. Industrial metals will nevertheless continue to be affected by worries about a recession, increased prices, and higher interest rates.

However, recession fears have risen as a result of rapid interest rate hikes that could cause a worldwide economic downturn and reduce demand for metals. 

Chilean state-owned Codelco, the largest copper producer in the world, will rejig its strategy to produce more sustainable copper and to satisfy the Andean nation's rising environmental demands.

Outlook: We expect copper to trade lower towards 691 levels, a break of which could prompt the price to move lower to 681 levels.  

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