Commodity Research - Morning Insight 20 Aug 2025 by Kotak Securities
Bullion
Gold spot extended their decline on Tuesday, tumbling over 0.50% to hit two-week lows pressured by a stronger US dollar and easing geopolitical expectations of potential breakthrough in talks between Trump, Putin, Ukrainian leader Zelenskiy, and European leaders fueled hopes of a ceasefire. Silver also fell more than 1.6%, weighed by softer industrial demand outlook as US July building permits fell to a five-year low of 1.354 million, below forecasts of 1.386 million. Meanwhile, Fed Governor Bowman reiterated expectations of three rate cuts by year-end, emphasizing the employment mandate. Today Gold continues to hold losses trading steady near $3,315 per ounce as investors remain cautious ahead of key catalysts, including today's FOMC Minutes and Fed Chair Powell’s upcoming address at Jackson Hole, which could offer further clarity on the central bank’s policy decision.
Crude Oil
WTI crude oil prices slipped to $62.3 per barrel yesterday, as the potential for a trilateral meeting between Russia, Ukraine, and the US raised hopes for the lifting of sanctions on Russian crude, which could boost global supply. Prices briefly found support due to supply disruptions, as Russian crude deliveries to Hungary and Slovakia were suspended on Monday following the second Ukrainian attack on Russia’s Druzhba pipeline in two weeks. Markets are also keeping tabs on the looming US tariffs on India as a punishment to India’s continued purchases of Russian crude. Today, oil prices remain under pressure as traders monitor developments in Ukraine peace talks. Uncertainty surrounding a potential truce deal may keep prices volatile, particularly after President Trump suggested that Putin might not be interested in reaching an agreement. Additionally, the market awaits the EIA inventory report, following the API's report of a 2.4 million-barrel draw in US oil stocks for the week ending August 15.
Natural Gas
NYMEX gas futures tumbled 5% yesterday to $2.72/mmBtu amid shift to cooler weather forecasts and declining LNG export flows while output continues to hit record highs.
Base metals
Base metals closed on a weak note. Aluminium prices have been under pressure, sliding for two straight sessions, as the U.S. broadened its 50% tariffs on steel and aluminium imports to include hundreds of additional products, while prospects of a Russia supply boost should the Ukraine war ease added to the downside. Copper, meanwhile, drew attention as China’s output fell to 1.27 million tons in July, retreating from June’s record high amid the government’s crackdown on industrial overcapacity. This marks a possible turning point for smelters that had maintained record production despite tight feedstock supply. LME metals may remain under pressure, while MCX copper is expected to trade with a sideways-to-bearish bias within the 867–879 range
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