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Comex Gold futures traded positive near $2,650 per ounce, building on a 27% surge in 2024 fueled by the Federal Reserve's aggressive rate-cutting cycle, robust haven demand, and significant central bank gold purchases. Investors are closely monitoring potential adjustments to the U.S. Federal Reserve's interest rate policy, particularly in light of President-elect Trump's proposed tariffs and their anticipated inflationary consequences. Several factors are expected to drive further gold price appreciation in the coming year including heightened political and economic uncertainties, increasing demand for gold as a hedge against fiscal instability and a weakening dollar, and persistent inflationary pressures.

WTI Crude Oil trading positive by about 1% near $72.40 per barrel supported from an industry report indicating a continued decline in US crude oil stockpiles. The API report revealed a draw of 1.4 million barrels last week, marking a potential sixth consecutive week of inventory depletion. Recently, Oil prices have exhibited a period of consolidation since mid-October WTI demonstrating little year-end change. Investor sentiment is currently characterized by concerns regarding a potential oil glut in the coming year, thereby hindering OPEC+ efforts to restore production levels.

LME base metals exhibited mixed performance on the first trading day of 2025. A weakening U.S. dollar provided support, making dollar-denominated commodities more affordable for holders of other currencies. Industrial metals gained traction, bolstered by a positive Chinese manufacturing survey and anticipation of further stimulus measures from Beijing. The U.S. dollar, after a year of robust gains, softened on the opening day of trade, trading at 108.31, a 0.23% decline. LME copper edged up 0.15% to $8,780 per metric ton, while aluminum registered a 0.60% increase to $2,565 per ton.

In China, the Caixin manufacturing purchasing managers index held above 50 for a third month in December, although it was down on- month, pointing to a bumpy recovery of the top metals-consuming economy. (Bloomberg)

European gas prices surged 4.3% to €51/MWh, the highest since October 2023, as concerns mount over potential supply disruptions. Russian gas deliveries to Europe via Ukraine ceased on January 1st following the expiration of a key transit contract. This coincides with forecasts for frigid temperatures, increasing demand for heating and potentially accelerating withdrawals from already depleted storage. The loss of this crucial supply route, particularly for central European nations, heightens market anxiety and raises fears of a renewed energy crisis.

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