Commodity Research Evening Track by Kotak Securities Ltd
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Commodities firm on US rate-cut bets as US jobless claim data awaited
COMEX Gold recovered to trade above $2433 per ounce after a five-day fall, the biggest stretch of drops in nearly six months, as traders took signals from wider markets after a bumpy ride, with the US currency and Treasury yields also weakening. It is trading higher amid prospects of US interest rate reduction and as investors continue to analyze the reality of recession fears. At the same time, the prospect of an escalation in the Middle East conflict fueled bullion's upward trend.
WTI Crude Oil held near $75 after its highest gain in a week in the previous session, as traders remained focused on wider market changes and Middle Eastern tensions. Israel remains braced for an Iranian attack, despite remarks made by the Iranian president during a phone chat with his French counterpart that suggested a diplomatic avenue to de-escalation.
Libya’s biggest field halted crude oil production has helped underpin the gains, while a rare cross-border attack by Ukrainian troops into Russia added to geopolitical tensions.
U.S. crude oil inventories dropped by 3.7 million barrels to 429.3 million barrels in the week ended Aug. 2, fell for a sixth week to their lowest since February that may alleviate some of the concerns about faltering demand in the biggest consumer, but there were builds at the key Cushing storage hub and in gasoline. EAI reported that crude oil production rose by 25,000 barrels per day (b/d) to 13.33 million b/d during the report week.
LME base metals continue trade mixed with demand concern in China and the US following weak manufacturing data. LME Copper trading near 5-month lows of $8,759 per ton pressured by surge in stockpiles largest in four years, underscoring the weak demand in Asia.
London Metal Exchange copper stockpiles on Wednesday surged by an additional 42,174 tons, the most in four years in tonnage, to the highest since 2019. The material has been flooding into sheds in South Korea and Taiwan.
European natural gas traded at the highest levels this year on fears of possible disruptions to Russian fuel crossing Ukraine. Benchmark futures rose to the highest since December after a period of intense fighting in Russia’s Kursk region, which hosts a key gas intake point.
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