IGI Logo

Below is Daily Commodity Article by Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities, and Currencies, Angel One Ltd

Gold hovers near $1900; Crude prices slip after hitting 10-month highs.

GOLD

Gold prices dipped slightly on Wednesday due to a stronger U.S. dollar, although the anticipation that the Federal Reserve will maintain current interest rates during its upcoming policy meeting provided some support for the precious metal.

The dollar gained ground 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) and a 0.3% rise in core CPI from the previous month.

Traders now believe there's a 61% chance of the Fed maintaining rates not only in September but also in November, according to the CME FedWatch tool.

Market focus has shifted to upcoming U.S. producer prices, retail sales data, and the European Central Bank's rate decision, all preceding the Fed's policy announcement on September 20th.

Outlook: We expect gold to trade lower towards 58500 levels, a break of which could prompt the price to move lower to 58430 levels.

CRUDE OIL

Oil prices slipped in the previous session due to concerns over a surprise build in U.S. crude and fuel inventories following a recent surge to 10-month highs.

However, the International Energy Agency (IEA) indicated that Saudi Arabia and Russia's decision to extend oil output cuts until the end of 2023 will likely create a significant market deficit in the fourth quarter.

The Organization of the Petroleum Exporting Countries (OPEC) also maintained its positive outlook for global oil demand in 2023 and 2024.

With the latest U.S. inflation data reinforcing expectations that the Federal Reserve will keep interest rates steady and potentially extend its pause, optimism for strong oil demand persists in the market.

Outlook: The outlook for crude oil remains cautiously optimistic, with potential supply deficits supported by extended output cuts from major producers and hopes of sustained strong demand amid expectations of continued low interest rates hikes.

BASE METALS

Copper prices rebounded on Wednesday, driven by the anticipation of the U.S. Federal Reserve maintaining interest rates amid moderate inflation data.

Although U.S. consumer prices showed a significant increase in August, the annual uptick in underlying inflation was the smallest in nearly two years.

The prospect of stable U.S. interest rates potentially weakening the U.S. dollar, coupled with the European Central Bank's expected rate hike, which could further pressure the dollar, supported copper as it became more affordable for foreign buyers.

Nevertheless, concerns persist regarding industrial metals demand in China, despite Beijing's efforts to revitalize the troubled property market through various support measures.

Outlook: Copper prices are expected to remain influenced by central bank decisions and global demand dynamics, with continued attention on China's industrial sector.

Please refer disclaimer at https://www.angelone.in/ 
SEBI Regn. No.: INZ000161534

Above views are of the author and not of the website kindly read disclaimer