Kotak Securities: Commodity Research - Evening Track - 11 Jul 2024
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Commodities rise ahead of US CPI report
COMEX Gold rose above $2,380 per ounce, rising for the third straight session, as investors await US CPI data due later today to seek cues on the Federal Reserve's timing and depth of interest rate cuts. Spot gold gained 0.5% to $2,383.63 per ounce while U.S. gold futures GOLD rose 0.4% to $2,389.00. Currently, markets are pricing in a 73% probability of the Fed reducing interest rates in September, with another cut expected in December. WTI crude Oil climbed for a second day supported by decline in US crude inventories countered the IEA’s call that demand growth is slowing. Global crude benchmark Brent advanced above $85 a barrel after posting a 0.5% gain today.
As per IEA global oil demand growth will be less than 1 million barrels a day this year. US stockpiles fell by 3.4 million barrels last week, with gauges of jet fuel and gasoline consumption both rising as the summer travel season continues. LME metals are trading higher as market expectations for a policy turnaround from the Third Plenum. However, Copper prices slipped on poor demand prospects in China and record inventories in LME approved warehouses. Three-month copper on the London Metal Exchange slid 0.40% at $9,866 per metric ton. Aluminium and Zinc trading higher by around 0.42 and 0.50% respectively.
The latest batch of economic data in China pointed to persistent demand weakness, while investors look forward to a key political meeting next week for signs of more economic support. European natural gas prices edged lower as US weather forecasts shifted cooler, which will curb nat-gas demand from electricity providers to power air conditioning.
The Commodity Weather Group said Wednesday that the northern and central parts of the US would see significantly cooler temperatures July 15-19. Investors now shifted their focus to upcoming inflation reports. The June Consumer Price Index (CPI) report today expected to show inflation continuing to decline to an annualized rate of 3.1%, down from May's 3.3%. While Friday's Producer Price Index (PPI) report anticipated to reveal a slight increase of 0.2% for June, up from May's 0.1% rise.
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