Commodity Research Evening Track by Kotak Securities
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Gold extends decline, as bet for US rate cut to be less agressive
Comex Gold decline for a sixth day to trade near $2,636, as comments from Federal Reserve policymakers added to signs that US rate cuts won’t be as aggressive as previously thought. Moreover, pressure from a stronger dollar the markets priced in a more gradual pace of easing this year and into early 2025. Swaps markets now point to about 50 basis points of cuts this year, down from 75 basis points about two weeks ago. Fed Bank of Boston President Susan Collins emphasized on Tuesday that monetary easing should be careful and data-based. Her Atlanta counterpart Raphael Bostic said threats to the labor market have increased, although inflation risks have fallen and the economy is still strong. (Bloomberg)
WTI Crude Oil steadied near $74 a barrel following the previous session’s sharp decline as China plans a Saturday briefing on fiscal policy, with the market also monitoring developments in the Middle East. Now attention shifted back to Chinese demand as Beijing withheld significant new stimulus following a week-long holiday, reigniting concerns about demand growth from the world’s largest crude importer. Meanwhile, API data showed that US crude oil inventories surged by 10.9 million barrels last week, the largest weekly build since November 2023, far exceeding the expected 2 million barrel increase.
LME base metals hold steady after China announced another briefing on policy support, rebooting speculation for major fiscal measures would be rolled out after an address on Tuesday left investors disappointed. In the previous session, LME Copper prices tumbled over 2% as briefing from the National Development and Reform Commission in China signaled no additional stimulus measures, disappointing markets.
US natural gas futures were little change in today’s trades, weighed down by colder weather, which could boost heating demand, with Hurricane Milton, the Category 4 storm could knock out power in several parts of Florida. As per the Commodity Weather group, the forecasts shifted cooler for the eastern and parts of the central US for Oct. 13-17. In its 2024 Winter Fuels Outlook, the EIA forecasts a colder winter, leading to higher energy consumption for heat.
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