Evening Track : Copper Rallies on Supply Woes, Gold Eyes Sixth Weekly Gain Before Payrolls - Kotak Securities Ltd
Comex gold futures held steady near $2,890 per ounce, approaching record highs, as investors awaited a crucial US jobs report. Moreover, geopolitical tensions and economic uncertainties fueled safe-haven demand, pushing gold up over 2% this week. The upcoming nonfarm payrolls data could influence Federal Reserve rate cut expectations. China's central bank continued its gold reserve expansion for the third consecutive month in January, adding 0.16 million troy ounces. Ongoing trade tensions, particularly between the US and China, along with concerns regarding potential tariffs and the former president's unconventional foreign policy, have bolstered gold's appeal as a safe haven asset amidst prevailing uncertainties.
WTI crude oil is trading near $71.25 per barrel, rebounding after two days of declines but poised for a third consecutive weekly loss due to concerns about the impact of US tariffs on China. These tariffs, and China's retaliatory measures, have ignited fears of reduced oil demand growth and a potential oversupply, exacerbated by increased US production. While the US has also imposed new sanctions on Iran, their limited scope has done little to alleviate market anxieties. Overall, the escalating trade tensions are overshadowing the Iranian sanctions and raising serious questions about the trajectory of global oil demand. LME Zinc and Lead also up by 1.5%
LME copper prices surged 1.5% to near $9,417 per ton, marking a fifth consecutive day of gains and the largest weekly advance since September. This surge is driven by concerns about tightening supply from the world’s largest copper producer, Chile, took center stage. Moreover, anticipated increased demand from China post-holiday, coupled with low processor inventories prompting restocking. A widening premium in US copper futures over London, reaching the highest point since last year's short squeeze, further fuels the upward trend. Concerns about potential US import tariffs on copper, as part of broader trade actions threatened by the previous administration, are also contributing to price volatility.
European natural gas prices are nearing €54 per megawatt-hour, marking a fourth consecutive weekly increase fueled by an impending cold spell across Europe, raising concerns about dwindling fuel reserves. With temperatures expected to drop in key countries like the UK, Germany, and France, heating demand is likely to rise, potentially depleting stockpiles already at their lowest levels for this time of year since 2022. This situation has pushed prices up by over 10% since the beginning of 2025, the longest sustained weekly gain since November.
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