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Gold prices remained under pressure, hovering near a three-week low, as robust U.S. economic data fueled concerns of prolonged higher interest rates.

U.S. producer prices surged by 0.7% in August, the largest uptick in over a year, accompanied by a 0.6% rise in retail sales.

The resulting strength in the U.S. dollar and increased bond yields diminished gold's attractiveness to foreign investors.

While the market anticipates the Fed to keep rates steady in its upcoming meeting, there's a 39% chance of a rate hike in November.

Elevated interest rates continue to erode gold's appeal as an interest-bearing asset. Additionally, the European Central Bank raised it's interest rates to record-high of 4% and signalled this was likely to be its final move.

Outlook: We expect gold to trade higher towards 58680 levels, a break of which could prompt the price to move higher to 58760 levels.

CRUDE

Crude oil prices surged to a 10-month high, driven by China's move to reduce banks' cash reserve requirements, aimed at bolstering its economic recovery.

This, coupled with expectations that major global interest rate hikes might be reaching their conclusion, propelled oil prices higher for a third consecutive week.

Concerns about supply and the likelihood of the U.S. central bank maintaining rates, especially following Europe's signal that its recent hike might be its last, further buoyed oil markets.

Additionally, the International Energy Agency's projection of Saudi Arabia's and Russia's extended oil output cuts leading to a market deficit in the fourth quarter added to the bullish sentiment.

Outlook: We expect crude to trade higher towards 7590 levels, a break of which could prompt the price to move higher to 7660 levels.

BASE METALS

Copper prices saw an uptick as China's initiatives to bolster its economic recovery offered some relief from the pressures of elevated inventories and a stronger dollar.

Market attention is focused on upcoming data, including China's new home sales, property investment, and industrial production figures, which are anticipated to shed light on the nation's economic health, a critical factor for the top consumer of base metals.

This year, copper demand, essential in power and construction, has been subdued due to China's uneven post-COVID economic rebound, while the robust U.S. currency has made dollar-denominated commodities costlier for foreign buyers.

Concurrently, copper stocks in LME-registered warehouses have surged to their highest levels since October 2022 following significant growth in July-September.

Outlook: We expect copper to trade higher towards 743 levels, a break of which could prompt the price to move higher to 746 levels.