Commodity Research - Daily Evening Track 01 October 2025 by Kotak Securities Ltd
Gold Hits fresh record as US Shutdown fuels safe-haven demand, while crude pressured by OPEC+ supply risks
Spot gold surged to a fresh record high of $3,895 per ounce on Wednesday, buoyed by strong safe-haven demand as the US government shut down much of its operations for the first time since 2019. The deadlock, which risks delaying critical economic data releases such as Friday’s non-farm payrolls, has heightened uncertainty, while growing expectations of Federal Reserve easing further underpinned bullion. Markets are now pricing in a 95% probability of a rate cut this month, with odds of an additional reduction in December near 76%, according to CME FedWatch. The dollar weakened as dovish Fed bets intensified following the failed budget bill, which could weigh on economic output. Labor market signals also support the easing narrative, with job openings edging higher but hiring slowing to its lowest since mid-2024. Meanwhile, ETF inflows in September marked the strongest in three years, underscoring robust investor appetite for gold amid political and economic turbulence.
WTI crude oil slipped over 1% on Tuesday, trading near $61.70 per barrel, as markets weighed the possibility of OPEC+ accelerating its next supply hike. Delegates suggested the group may consider adding 500,000 barrels per day in three monthly installments to reclaim market share, though OPEC officially denied such plans. The weekend meeting is expected to be closely watched for clarity. Broader sentiment was also pressured by the ongoing US government shutdown, which unsettled equity markets in the US and Asia. Crude has now posted a second consecutive monthly decline, with earlier OPEC+ supply increases fueling concerns that output growth will outpace demand. While China’s stockpiling has provided intermittent support, the IEA forecasts a record surplus in 2026, raising downside risks.
Base metals moved higher, with copper leading the gains at $10,300/ton on the LME and above ?952/kg on the MCX, buoyed by persistent supply concerns. Chile’s output fell 9.9% in August following a deadly accident at Codelco’s flagship mine, while a mudslide at Indonesia’s Grasberg mine has taken about 3% of global supply offline, with full recovery not expected until 2027. Tightening inventories added further support, as Shanghai copper stocks dropped nearly 4%. Meanwhile, China’s push to rein in overcapacity is set to slow refined copper output growth to just 1.5% annually in 2025–26. Caution is likely to persist ahead of the US private jobs report and lingering government shutdown worries.
US natural gas futures climbed 2.2% to $3.376/MMBtu, marking a ten-week high, supported by lower output. Production in the Lower 48 eased to 107.4 bcfd in September from a record 108.3 bcfd in August, after earlier surpluses boosted storage to 6% above the five-year average. On the demand side, forecasts of abovenormal warmth into mid-October and steady LNG feedgas flows of 15.7 bcfd offered support. Longer term, a 60% increase in global LNG capacity by 2030, half from the US, poses oversupply risks for Asia and Europe. Domestically, resilient demand from slower renewable adoption and rising AI-driven power needs may underpin prices.
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