Evening Track : Comex Gold nears $2,880/oz as weak dollar, tensions boost demand - Kotak Securities Ltd
Comex Gold futures trading higher near $2,880 per ounce, driven by weakening dollar and heightened safe-haven demand, fueled by escalating geopolitical tensions, underpinned the rally. The fading prospect of a swift Russia-Ukraine peace deal, compounded by US-Ukraine diplomatic friction, bolstered bullion's appeal. Furthermore, President Trump's impending tariffs on Canada and Mexico, coupled with increased levies on China, stoked fears of economic deceleration. These anxieties, signaling a potential US economic slowdown, amplified gold's safe-haven status. Concurrently, rising market expectations for Federal Reserve interest-rate cuts further enhanced gold's attractiveness as a non-yielding asset.
WTI crude oil is trading moderately lower $69.30/barrel, influenced by a complex interplay of geopolitical and economic factors. We have seen initial gains during the Asian market, driven by robust Chinese manufacturing data signaling improved fuel demand, were tempered by uncertainty surrounding the Russia-Ukraine conflict. President Trump's proposed tariffs, threatening retaliatory measures, further clouded the global economic outlook. Elsewhere, European efforts to establish a security coalition for Ukraine post-ceasefire underscored the fractured transatlantic alliance amidst Trump's direct engagement with Russia. Sanctions against Russian oil, while intended to punish Moscow, are now juxtaposed with potential shifts in US policy, creating market volatility.
LME base metals are experiencing upward momentum, with zinc leading the gains at a 1.30% rise to $2,835 per ton. Copper and aluminum are also up, albeit moderately, around 0.30% at $2,975/tonne. The looming threat of U.S. import tariffs, ordered by Trump, is a key market driver. A potential copper tariff could initially flood the U.S. market, pressuring domestic prices. Simultaneously, China's annual congress presents crucial uncertainties. Addressing industrial overcapacity, a weak property sector, and escalating U.S. trade tensions will significantly impact global commodity markets. Beijing's efforts to meet 2021-2025 five-year plan targets, particularly regarding energy and emissions, are also under scrutiny, adding further complexity to the market outlook.
US natural gas futures dip below $3.8/MMBtu, a two-week low weigh down by record production, reaching 104.7 bcfd in February, coupled with forecasts for milder March weather, are suppressing heating demand and anticipated storage withdrawals. Despite robust LNG exports, averaging 15.6 bcfd, the market remains weighed down by abundant supply. Notably, increased flows from Venture Global’s Plaquemines LNG plant, now at 1.8 bcfd, are bolstering export volumes. However, storage levels, still 12% below the five-year average due to prior extreme cold, remain a key monitoring point
Today, traders will focus on the US ISM Manufacturing PMI for a quick, current view of the economy's health through business purchasing managers' insights
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