Evening Track : Gold steadies amidst Mideast De-escalation hopes and Fed Rate Cut speculation; Oil holds steady as US maintains Iran pressure by Kotak Securities Ltd
Comex Gold futures surged past $3,350 per ounce, underpinned by a sharp decline in the US dollar stemming from heightened dovish signals from the Federal Reserve. President Trump's suggestion of an early Fed Chairman announcement, expected to favor a pro-low-rate candidate, amplified market expectations for looser monetary policy. This sentiment was further reinforced by Chairman Powell's remarks implying that softer tariffs would be disinflationary, prompting the FOMC to consider easing financial conditions. Concurrently, major central banks including the ECB, BoE, PBoC, RBI, and SNB have initiated rate cuts, reducing the opportunity cost of holding non-yielding gold. Geopolitical de-escalation between Iran and Israel moderated an even stronger rally.
WTI Crude Oil has stabilized above $65 per barrel, influenced by US President Donald Trump's reaffirmation of his "maximum pressure" campaign on Iran, targeting its oil revenues. This clarity followed earlier mixed signals regarding the strategy. Trump also hinted at potential talks with Iran next week. Earlier in the week, oil saw its largest two-day decline since 2022 after an agreed truce between Israel and Iran eased Middle East supply disruption fears, with Trump declaring the conflict "over" post-US bombings of Iranian nuclear sites. The market's focus now shifts to the July 6 OPEC+ meeting, which will determine August's production policy, with Russia open to output increases if deemed necessary.
LME base metals are trading sharply higher, with all major metals up nearly 1%, led by copper which has surged over 1.5% to $9,862.50/ton, hitting a two-month high. The rally comes amid mounting tariff risks from the U.S., prompting traders to shift metal across exchanges and triggering supply squeezes at key storage hubs. LME copper inventories have plunged over 63% YTD to around 93,000 tons, as shipments were redirected to the U.S. ahead of potential tariffs. Despite a slight easing in spreads, supply tightness persists, pressuring Chinese smelters to boost exports to meet LME obligations.
European natural gas prices have significantly declined, with benchmark futures falling as much as 2.7% on Thursday, following a sustained truce between Israel and Iran. This de-escalation has eased regional supply concerns, allowing traders to refocus on bolstering winter reserves. Prices have dropped over 15% this week, returning to pre-conflict levels. Europe's natural gas storage sites are now over 56% full, a substantial recovery from winter depletion. Furthermore, subdued demand from China is expected to aid Europe's continued efforts in replenishing its stockpiles, mitigating ongoing supply vulnerabilities.
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