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

GOLD

After being under pressure in the recent weeks, spot gold prices ended the previous week on a positive note, gaining 1.1 percent.

The gains in precious metals were fueled by a falling Treasury yield and a weaker dollar, which were pushed lower by the Federal Reserve's announcement of a large but widely expected interest rate hike. The Federal Reserve approved its largest interest rate hike in more than a quarter-century on Wednesday to combat increasing inflation, which unexpectedly advanced to its highest level since December 1981.

Another factor contributing to the bullion's rise was a drop in global equities on, as a slew of rate hikes by global central banks revived concerns that aggressive policy tightening could force countries into recession.

With the currency falling and the benchmark US 10-year Treasury yields falling, demand for greenback-priced gold witnessed an uptick. However, following the Fed's interest rate hike, which would strengthen the dollar, the upside appears to be limited in the coming week.

Outlook: Gold is likely to trade higher given the ongoing economic uncertainty and rising inflation, however, the upside seems to be limited over a strengthening dollar.

CRUDE

Crude oil appeared to extend its winning streak for another week, but prices came under pressure during the week, causing crude to lose its winning streak and conclude the week on a negative note, down 9.4%.

Prices continued to trade on a positive note at the start of the week as supply constraints have been exacerbated by a drop in exports from Libya due to a political crisis that has impacted output and ports.

However, prices soon came under pressure just as the restrictions were being eased in the Chinese cities of Shanghai and Beijing, and renewed concerns of a fresh Covid outbreak at a bar in Beijing have raised fears of a new phase of lockdowns.

The Federal Reserve raised interest rates by three-quarters of a percentage point, the highest increase since 1994, putting more downward pressure on prices. OPEC expects demand growth to slow in the coming year as rising oil prices contribute to driving up inflation and act as a drag on the global economy.

Prices saw little respite as the dollar index fell from its highest level since 2002, relieving downward pressure on oil prices. A higher dollar makes oil more expensive for holders of other currencies, curtailing demand.

Outlook: We expect crude to trade lower towards 8260 levels, a break of which could prompt the price to move lower to 8120 levels.

BASE METALS

The industrial metals pack continued to witness pressure during the week, as all the metals ended on a negative note with aluminum being the top loser, down 4.9 percent.

Metal prices continued to remain under pressure, with aluminum prices falling to a seven-month low on fears of further lockdowns in top consumer China, as well as inflation fears and increasing interest rates triggering a sell-off.

The pressure on base metals came as the outlook for demand deteriorated following the Federal Reserve's large rate hike, which fuelled fears of a recession despite signs of improvement in China. Metals demand is in jeopardy as developed-country monetary policy tightening threatens to hinder economic growth and trigger a likely recession. The dollar index, which rose to a new two-decade high, made greenback-denominated commodities more expensive for buyers using other currencies.

However, prices saw some respite after Copper and Aluminium prices rebounded after the top metals consumer, China, saw a stronger-than-expected economic data that foreshadowed an uptick in demand. Following a slump in April, China's economy showed signs of a rebound in May, with industrial production unexpectedly rising by 0.7 percent after falling by 2.9 percent in April. Declining stockpile levels and constrained supply mitigated some of the metals' losses.

Outlook: We expect copper to trade lower towards 733 levels, a break of which could prompt the price to move lower to 723 levels.   

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