IGI Logo

Gold and silver correct from recent highs on strong dollar, WTI Crude oil slides on Venezuela supply deal

Spot Gold eased about 1% to trade near the $4,460 area as investors booked profits after a brief rally to multi-session highs. Silver also fell over 2% near $79.3 due to firmer U.S. dollar trading near multi-week highs, continues to pressure bullion by making dollar-priced assets more expensive for overseas buyers. Market attention has now shifted firmly to key U.S. economic data due this week, including ADP private payrolls, JOLTS openings, and the crucial non-farm payrolls report on Friday. These releases will be closely watched for signals on the Fed rate path, with markets currently pricing in at least two rate cuts later this year. While near-term upside may be capped by dollar strength, ongoing geopolitical risks and expectations of a more accommodative Fed policy continue to provide a positive medium-term outlook for gold and silver.

WTI crude futures extended recent losses, slipping over 1% toward $56.5 /bbl, after Trump announced an agreement for Venezuela to deliver up to $2 billion worth of crude barrels to the US, a move expected to increase available supply. This potential increase, including barrels that may be diverted from China, is viewed as adding to global supply expectations and keeping price gains capped. In contrast, API data showed a larger-than-expected crude draw last week of 2.8 mb, showing resilient U.S. demand and tighter domestic stocks. On the geopolitical front, progress towards a U.S.–Ukraine security deal has raised the prospect of eased curbs on Russian crude exports, softening supply concerns. Near-term bias remains mildly bearish to neutral, with prices constrained by supply overhang despite some demand resilience.

Base metals saw a mixed session as copper and nickel retreated from intraday highs, reflecting profit booking after a sharp rally. COMEX copper slipped from record levels, pressured by a stronger dollar and cautious positioning ahead of major U.S. economic releases. Still, copper prices remain elevated above $13,000/ton, underpinned by tariff-driven supply tightness and resilient demand from grid upgrades, renewables, and data-center investment. In China, expectations of further monetary easing are helping stabilise the demand outlook. Nickel continues to attract attention after hitting multi-year highs on potential supply curbs in Indonesia, though persistently high LME stocks suggest the market remains structurally oversupplied, limiting follow-through upside.

U.S. natural gas rebounded over 4.5% to trade near $3.50/ MMBtu after six consecutive losing sessions, as prices found support near a nine-week low. The recovery is driven by forecasts of colder weather in the second half of January, likely boosting heating demand. Supply-side fundamentals remain positive, with Haynesville production down 2.6%, indicating tightening basin output. Meanwhile, Lower-48 exports to Mexico remain steady near 6.0 bcf/day, and LNG feedgas flows stay elevated at around 18.5 bcf/day. Near-term bias turns supportive, with weather-led demand and firm export flows cushioning downside.

Please refer disclaimer at https://www.kotaksecurities.com/disclaimer

SEBI Registration No. INZ000200137