Commodity Research Evening Track by Kotak Securities
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Commodities volatile as investors await Key US Data
COMEX Gold slipped to its lowest level in two weeks to trade near $2,370 per ounce on Thursday, as investors became cautious ahead of important US economic data releases that could offer insights on the Federal Reserve's prospective rate-cut timing. Markets have fully priced in a September rate decrease, with two additional reductions expected by the end of the year. Now the key focal points include the preliminary Q2 GDP figures due later today, followed by the June PCE price index report on Friday.
WTI Crude Oil prices are sliding amid larger bearish sentiments in commodities, on concern about demand in top importer China outweighing weekly inventory decreases in the United States. Brent and WTI are both down by more than 1%, to $80.90 and $76.22 a barrel, respectively. As per government data, China's oil imports and refinery runs this year have trended lower than in 2023 on weaker fuel demand amid sluggish economic growth. Elsewhere, in the Middle East, efforts to achieve a cease-fire agreement to end Israel's war in Gaza with militant group Hamas have gathered traction over the past month.
LME base metals continue to trade under pressure due to concerns about industrial and property market issues in China, which are affecting demand prospects. LME Copper fell about 1% to trade below the $9,000 per ton for the first time since early April weigh down by selloff in global stock markets and rising pessimism about the outlook for demand in China and elsewhere. The recent selloff in global technology markets has raised concerns about the strength of the AI industry. Investors piled into copper in anticipation of increased demand for data centers and electrical infrastructure. LME Zinc and Nickel is down by 0.2% and 0.60% respectively.
Nymex Henry Hub gas prices rose on improving demand from Japan, China and India. Moreover, the volume of natural gas injected into storage from April 1 to October 31 is 15% lower than the five-year average for the same period last year and 15% lower than the year before, according to the EIA. However, European natural gas prices down about 1.5% to trade around $10.3 per mmbtu on expectation of lower seasonal demand in Europe.
Today's US GDP, initial jobless claims and durable goods orders will be closely watched for the timing of rate cuts this year.
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