Evening Track : Gold soars to record high as tariff uncertainty fuels safe-Haven buying by Kotak Securities Ltd
Comex Gold April futures surged to a record high of $2,859.50 per ounce, surpassing the previous peak from October supported by investor demand for safe-haven assets following renewed tariff threats by the US leader against Mexico and Canada, and potential tariffs against China. The precious metal, on a five-week winning streak, as these threats raise concerns about trade wars and their impact on economic growth. Furthermore, accommodative monetary policies from major central banks, including the ECB's expected rate cuts and the Bank of Canada's end to quantitative tightening, along with earlier cuts by the Riksbank, have bolstered gold's upward momentum.
WTI oil prices dipped below $73 per barrel, paring earlier gains, amid uncertainty surrounding potential US tariffs on Canadian and Mexican crude imports. While a 25% tariff on other goods is planned, the administration is considering exempting oil. Canada and Mexico are key crude suppliers to the US. The upcoming OPEC+ meeting on February 3rd is also in focus, as the US administration has urged increased production to lower prices. OPEC+ is expected to maintain current output levels until April. Despite recent gains spurred by Russian sanctions and cold weather, the potential tariffs and calls for increased OPEC production have moderated oil price increases, although crude is still on track for a modest January gain.
LME base metal are poised for weekly declines due to escalating trade tensions as US impending tariffs on goods from Canada, Mexico, and potentially China, threaten global economic growth. LME Copper, aluminum, and zinc prices have weakened by about 0.50% today as Trump proposed tariffs, including levies on imported chips, pharmaceuticals, steel, and aluminum, aim to bolster domestic production. Compounding concerns is a recent contraction in Chinese manufacturing activity, a key indicator for copper demand. Trading volumes are expected to be thin this week due to the Lunar New Year holiday in China.
European natural gas prices rose by up to 2.3% on Friday, marking a 7% year-to-date increase and a third consecutive weekly gain. Prices are nearing their highest point since 2023 due to concerns about fuel inventories. Norwegian outages and other supply issues are tightening the market amidst persistent cold weather and rapid withdrawals from European storage facilities. The widening spread between summer and winter contracts, exacerbated by proposed German storage injection subsidies, disincentivizes stockpiling. Currently, procuring gas for winter delivery is more cost-effective
Today, Investors now await the December PCE Price Index, Personal Income & Spending and Chicago PMI for further economic insights.
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