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Below the Quote on Gold and Crude by Kaynat Chainwala, AVP-Commodity Research, Kotak Securities

Comex Gold closed marginally higher at $2,480.80/oz yesterday after retreating from its record high of $2,506.60/oz owing to recovery of the US dollar following a sharper-than-expected contraction in the US manufacturing PMI, which fell to an eight-month low of 46.8 in July from 48.5 in June. However, significant downside was limited as US jobless claims rose by 14,000 to 249,000, the highest level since June 2023, adding to evidence of a slowing jobs market. Additionally, the risk of a broader conflict in the Middle East is enhancing gold's appeal as a safe haven, with markets closely monitoring Iran's response to Israel's attack that killed a Hamas leader. Today, Comex Gold is approaching record high levels amid rising expectations for multiple rate cuts this year. Markets are now looking forward to the US non-farm payrolls report for further indications of a cooling labor market.

WTI crude futures dropped 2% yesterday amid signs of weakening factory activity in the top two consumers, the US and China. Reports of a retaliatory strike on Israel following the killing of Hamas political leader Ismail Haniyeh heightened geopolitical tensions in the Middle East, pushing prices to a one-week high of $78.90/bbl earlier in the session. However, contraction in US manufacturing PMI for the fourth consecutive month in July, coupled with an increase in jobless claims, sparked recession fears and hurt demand prospects, causing prices to pull back sharply to $76.20/bbl. Today, WTI crude has edged higher and is trading near $77/bbl, but it is still on track for a weekly decline, as OPEC+ has maintained its tentative plans to begin reviving halted production next quarter, with approximately 540,000 barrels per day expected to be added in the fourth quarter. Additionally, concerns about Chinese demand deepened with factory activity contracting for the third consecutive month in July.

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