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

GOLD

Spot gold prices continued to decline last week, ending the week down more than 3 percent and falling below the $1800 level, the largest weekly drop since mid-May.

The recent release of the minutes from the Fed Reserve's most recent meeting, which suggested a more restrictive monetary policy, and a stronger dollar both hurt the price of the yellow metal, which fell to nearly 9-month lows.

 The week's rise in the dollar caused gold to lose some of its appeals as a safe haven as investors flocked to the greenback to hedge against the deepening recession. As a result, the dollar reached two-decade highs, ultimately driving up the price of bullion for international buyers. In the very end, gold prices showed some stability as the dollar cooled off from its previous 20-year highs.

Outlook: Anticipation of a 75 basis point rate hike by the Federal Reserve in its upcoming meeting might keep the prices under pressure.

CRUDE

Post beginning the holiday-shortened week, the NYMEX crude had managed to post gains during the recent week ended. It ended with 5.3 percent, extending the gains from the earlier week.

The price of benchmark crude rose up above $100 after falling below the psychological level as supply shortage concerns resurfaced. However, over the week, crude prices experienced a strong sell-off due to concerns that global economies could go into recession as a result of rising interest rates, which would reduce the demand for oil.

A further blow to the existing supply crunch came a strike by Norwegian oil and gas employees, which would reduce exports and worsen supply constraints. Nearly one-fourth of Norway's gas output and roughly 15% of its oil output could be shut off as a result of a further planned escalation.

Outlook: Given the expectations of a 75 basis points rate hike by the US Fed and the rising inflation will have an effect on the demand. However, with supply concerns returning to the fore, the downside would likely remain capped.

BASE METALS

The base metals pack continues to be in the grip of the negative territory, as all the metals end in the negative for another week in a row. LME Nickel was the top losing metal, down 4 percent.

Due to concerns about a possible recession and a slowdown in global manufacturing activity, copper prices have fallen to 20-month lows this week, causing the metals group to move erratically.

Another hurdle for metals was the emergence of new coronavirus clusters in eastern Chinese cities, which reinforced COVID-19 rules and increased the risk to the country's economic recovery under the stringent zero-COVID policy of the government.

The dollar persisted in being a nemesis to the metals market, reaching a 20-year high against its rivals, making greenback-denominated metals expensive for holders of other currencies and lowering metal demand. However, going into the close, copper prices were able to cut short some of the losses on the back of optimism that China will likely roll out a stimulus program to help its economy.

Outlook: We expect copper to trade lower towards 653 levels, a break of which could prompt the price to move lower to 643 levels.   

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