Commodity Research - Morning Insight - 04 Mar 2026 by Kotak Securities
Bullion – Spot gold and silver plunged over 4% and 8%, respectively, pressured by a firmer US dollar and surging global bond yields. A sharp equity sell-off further weighed on bullion, as investors liquidated long precious metal positions to meet margin calls. From recent highs, gold and silver have corrected over 7.5% and 19%, respectively, as the dollar index climbed to a 13-week high of 99.6. Elevated oil prices at over 8-month peak have lifted inflation expectations, dampening prospects for aggressive Fed easing. Markets now price in 37 bps of rate cuts this year, down from 60 bps last week, with only a 2% probability of a March cut. However, geopolitical tensions in West Asia supported a rebound today, with spot gold reclaiming $5,190 and silver rising above $85. Focus now shifts to US ADP Employment Change and Services PMI data.
Crude Oil – Geopolitical tensions in the Middle East intensified, pushing WTI crude to $78/barrel, its highest level since June, before settling at $74.6, strongest close in 9-months. The rally was driven by concerns over escalating conflict involving the US, Israel, and Iran, and the growing risk of prolonged disruption to regional energy flows. Reports that Saudi Arabia may shut down its largest refinery, Qatar could halt LNG production, and Iraq has begun shutting operations at the Rumaila oil field and operated by Iraq’s stateowned Basra Oil Company, have heightened fears of supply tightening. Today, prices moved higher again to $75.7/barrel as traders continue to assess mounting supply risks despite comments from Trump, who stated that the US IDFC would provide insurance support to vessels to help maintain the flow of energy and trade.
Natural Gas – Nymex natural gas futures rose for a third straight session to $3.18 per mmBtu, supported by geopolitical risks and strong LNG export demand, as global buyers seek supply security amid rising tensions.
Base metals – Base metals closed mixed, with aluminium outperforming and gaining over 1% on the LME, while most peers declined. Copper retreated amid persistent demand concerns in China and rising inventories. Aluminium drew support from escalating Middle East tensions, which heightened supply disruption risks along the Strait of Hormuz—a key corridor for regional producers representing nearly 9% of global capacity. Reports of QatarEnergy halting aluminium output due to gas shortages further intensified supply concerns. Tightening spot spreads into backwardation signaled firm near-term physical demand. Conversely, copper remained under pressure as China’s official manufacturing PMI stayed in contraction for a second straight month. Robust refined output from Chinese smelters has continued to swell inventories, limiting upside momentum despite longer-term supply tightness in the broader copper market.
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