Commodity Research Evening Track by Kotak Securities
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Commodities advance ahead of US Inflation Data
COMEX gold surged to trade above $2480 per ounce, ahead of US economic data due later this week, with traders now focus to see if the prints will support forecasts that the Federal Reserve will soon shift to monetary easing. Investors are anticipating US Producer Price Index results on Tuesday and Consumer Price Index figures on Wednesday, which will provide insight into the health of the world's largest economy. Meanwhile, figures for money managers’ net bullish gold bets hit a five-week low, according to weekly data from the Commodity Futures Trading Commission.
On Saturday, Fed Governor Michelle Bowman said that she still sees upside risks for inflation and continued strength in the labor market, signaling she may not be ready to support a rate cut in September. Higher borrowing costs are typically negative for gold, because it doesn’t pay interest. (Bloomberg)
Additionally, the metal's upside bias persisted, as gold’s safe-haven appeal continued to be supported by ongoing geopolitical tensions. Reports indicated another Israeli airstrike on Gaza and Moscow's vow of ‘tough response’ to Ukraine’s incursions into Russia.
WTI Crude Oil rises more than 1.1% to more than $77 in today's trade, extending its first weekly increase since early July, as traders continue to monitor Iran's reaction to last month's death of a Hamas leader in Tehran. Tehran reiterated Sunday its determination to punish Israel for killing Hamas’ political chief, as Iranian state television reported that a missile unit of the country’s military was conducting maneuvers near the Iraqi border.
LME base metals began the week higher on forecasts of a slower decrease in China's home prices, and stable important data releases may assist maintain the domestic consumption picture, following better-than-expected import and CPI data. LME Copper rallied about 1% to $8962 from its lowest closing in five months, as orders to withdraw the metal from LME warehouses suggest that China's demand fall may have peaked.
European natural gas extending last week’s advance following concerns about Russian pipeline supplies across Ukraine. Benchmark futures increased as much as 2.6% to trade at the highest level since early December. Electricity prices in Germany and France followed gas, with year-ahead futures trading at the highest since June. Russian pipeline gas supplies continue to flow via the Sudzha intake point on its border, even after Ukrainian troops made a surprise crossborder attack last week.
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