Evening Track : Gold retreat as investors await key US Economic data, Crude oil falls on inventory expectations by Kotak Securities Ltd
Comex gold futures trading lower on Wednesday near $2,910 per ounce, retreating further from the all-time high set in the previous session mainly triggered by Federal Reserve Chair Jerome Powell's hawkish remarks, which reinforced expectations of slower rate cuts this year. Investors are now focused on the upcoming U.S. inflation report. Powell's statement that officials will be "patient" before easing monetary policy led to a rise in 10-year US Treasury yields, putting downward pressure on gold prices as the precious metal doesn't generate interest income. However, ongoing safe-haven demand, fueled by escalating trade tensions due to new tariffs, and dovish stances from other major central banks continue to support gold's upside potential. Additional factors contributing to gold's appeal include sustained central bank gold purchases and heightened geopolitical risks, particularly after Israel issued a warning regarding the Gaza ceasefire.
WTI crude oil prices fell below $73.50 per barrel following an American Petroleum Institute report indicating a substantial 9 million barrel increase in US crude stockpiles. This potential year-high inventory surge, if confirmed by official EIA data later this evening will further weigh on market sentiment. Traders are also monitoring official figures for a potential rise in Canadian crude flows to the US, especially after recent tariff threats. Additionally, US sanctions appear to be disrupting Russian crude exports, leaving Pacific platform crude stranded and forcing lower prices for ESPO grade crude offered to Chinese refiners.
LME base metals are trading mixed as Copper, Zinc, and Lead are positive but Aluminium is trading negative. China has tightened requirements for building new copper smelters, in its latest attempt to curb relentless capacity expansion in the world’s top producer of the refined metal. This move aims to curb capacity expansion in the world's top refined copper producer. LME Aluminium is down by more than 1% as investors assess the impact of US tariffs on imports. The US will impose a 25% levy on aluminum and steel imports from March 12th, potentially disrupting global trade in these metals. This situation is causing uncertainty in the aluminum market.
European natural gas futures fell about 3.4% today after hitting a two-year high, as traders weighed the potential impact of a price cap proposed by some EU officials. The measure faces resistance from most member states and major energy producers, who warn against its implementation. There are concerns over supply due to lower-than-average inventories and increased consumption during the cold winter, which could hinder efforts to replenish stocks in the summer.
U.S. consumer price index data will be released later today, with expectations of a slight slowdown in January's core inflation print to an annual 3.1%. The headline number is anticipated to hold steady at 2.9%.
Above views are of the author and not of the website kindly read disclaimer
