Commodity Research Evening Track by Kotak Securities
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Geopolitical risks drive commodity prices Higher
Comex Gold futures surged above $2,710 per ounce, securing its largest weekly gain since October 2022. This significant rise was primarily driven by escalating tensions in the Russia-Ukraine conflict, boosting gold's appeal as a safe-haven asset. Ukraine's recent announcement of a new type of Russian ballistic missile attack on the city of Dnipro has further intensified geopolitical concerns. Traders are also closely monitoring the potential for further monetary easing by the Federal Reserve.
WTI Crude Oil continue to trade positive for second consecutive session today, above $70 per barrel, as it poised for their largest weekly gain since early October, as tensions between Russia and Ukraine escalate. The conflict between Russia and Ukraine has intensified significantly in recent weeks. Russia launched a ballistic missile in response to Ukraine's expanded use of Western-supplied long-range weapons. This escalation of hostilities has heightened concerns about potential disruptions to global oil supplies, driving up prices.
LME base metal prices have declined due to a stronger dollar and waning optimism following China's recent tax rebate. Last week, prices surged after China removed a 13% export tax rebate, now believe this won't significantly disrupt Chinese exports. Concerns about insufficient stimulus measures from China, the world's largest base metal consumer, have also dampened demand outlook. Investors are now looking towards China's decision on its one-year medium-term lending facility rate next week for potential additional policy support.
European natural gas prices surged for the third week in a row, driven by rising supply concerns and freezing weather conditions. Benchmark futures climbed by 2.6% on Friday, nearing the €50 per megawatt-hour mark for the first time in a year. Europe is facing increased uncertainty regarding its remaining gas supplies from Russia, adding to the pressure on the market. Simultaneously, colder-than-normal temperatures in certain regions have accelerated the depletion of gas inventories.
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