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GOLD

Post a series of gains in the yellow metal, the previous week saw the metal giving up over 1 percent gains. Gold prices slipped to a one-week low as investors turned to the U.S. dollar amidst weak data from China.

However, the decline was tempered by rising expectations that the U.S. Federal Reserve might pause interest rate increases, making gold less expensive for other currency holders.

While the dollar gained momentum, reaching a three-month high due to sluggish growth in China's services sector, hopes of a potential end to interest rate hikes buoyed gold's performance.

Traders currently anticipate a 93% likelihood of the Fed maintaining rates at its upcoming policy meeting, with a 60% chance of rates remaining unchanged for the rest of the year.

The resilience of gold in the face of higher U.S. interest rates, which typically reduce its appeal due to its non-interest-bearing nature, remains noteworthy. Market attention also remains on forthcoming statements from Fed officials.

Outlook: We expect gold to trade lower towards 58700 levels, a break of which could prompt the price to move lower to 58620 levels.

CRUDE

After snapping a losing streak in the previous week, benchmark crude indices continued the upward momentum, as NYMEX inched nearly 1 percent higher.

Crude oil prices climbed higher, propelled by the expectation that key OPEC+ members, Saudi Arabia and Russia, would extend their supply cuts, providing support to crude prices.

The market widely anticipated Saudi Arabia's continuation of voluntary oil cuts into October, with Russia expected to announce a new OPEC+ supply cut agreement.

This support for crude was reinforced by unexpected extensions of voluntary supply cuts by Saudi Arabia and Russia, which raised uncertainty about their impact on Western inflation and economic policies.

Saudi Arabia would maintain its 1 million bpd output reduction, while Russia extended a 300,000 bpd cut until year-end.

These voluntary reductions complemented the April cuts by OPEC+ members, extending through 2024, potentially impacting fiscal tightening due to rising oil prices.

Outlook: Crude oil is poised for a positive outlook as Saudi Arabia and Russia's extended supply cuts, along with expectations of further reductions, support prices.

BASE METALS

The upward momentum in the metals segment came to a halt in the recently concluded week, with almost all metals closing lower, except for LME Lead, which saw a marginal increase.

Conversely, Copper prices decreased, primarily due to concerns about demand in China, the largest consumer of the metal, and a rise in inventories in London Metal Exchange-registered warehouses.

However, these losses were mitigated by a weaker U.S. dollar. The ongoing slowdown in China's housing market presents a persistent challenge for industrial metals, but the strength in Chinese imports of specific metals indicates that demand remains steady. Copper inventories in LME warehouses have nearly doubled since mid-July, reaching their highest levels since the previous October.

Additionally, the dollar index reached almost a six-month high amid disappointing global economic data, potentially increasing the cost of dollar-priced metals for buyers using other currencies.

Outlook: We expect copper to trade lower towards 717 levels, a break of which could prompt the price to move lower to 713 levels.

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