Commodity Article : Gold bounces from near three-weeks low; Crude oil post 3rd straight weekly gains Says Prathamesh Mallya, Angel One
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Below is Daily Commodity Article by Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities, and Currencies, Angel One Ltd
Gold bounces from near three-weeks low; Crude oil post 3rd straight weekly gains.
GOLD
Gold prices remained nearly unchanged after falling over 1 percent during the previous week.
A weakened dollar initially boosted gold, as investors had keenly awaited for the U.S. inflation report, which could sway Federal Reserve interest rate decisions.
However, the dollar gained strength, sending gold to three-week lows following U.S. inflation data, making gold less attractive to investors holding other currencies.
August's Labor Department report indicated a 0.6% increase in headline Consumer Price Index (CPI).
Market sentiment suggests a cautious approach from the Fed, with no rate hikes in the upcoming US Fed meet, but a potential rate hike in November.
Outlook: Gold prices remained stable amidst fluctuations driven by dollar strength and inflation data, with market sentiment indicating a cautious Fed approach and potential rate hike in November.
CRUDE OIL
Crude oil prices reached a 10-month high, underpinned by various factors including China's economic measures and the potential conclusion of major global interest rate hikes.
China's decision to reduce banks' cash reserve requirements to stimulate economic recovery had a positive impact on oil prices.
Supply concerns, reinforced by Saudi Arabia and Russia's extended output cuts, further contributed to the bullish sentiment.
Outlook: Despite a recent dip attributed to unexpected inventory builds in the U.S., the overall outlook for oil remains positive.
BASE METALS
Copper prices ended nearly unchanged, due to a combination of factors, including China's efforts to boost its economic recovery, which offered respite from concerns about rising inventories and a stronger dollar.
Key data releases in China, such as new home sales, property investment, and industrial production, were closely monitored for insights into the nation's economic health, given its status as the top consumer of base metals.
This year, subdued copper demand, particularly in construction and power sectors, has been a result of China's uneven post-COVID economic rebound.
Additionally, the strengthening U.S. dollar has made dollar-denominated commodities more expensive for foreign buyers, adding to market dynamics.
Notably, copper stocks in LME-registered warehouses have reached their highest levels since October 2022, reflecting significant growth in July-September.
Outlook: Copper prices remained resilient, with China's economic recovery efforts offsetting concerns about rising inventories and a stronger dollar, while close monitoring of key Chinese economic data.
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