IGI Logo

Below the Quote on Gold and Crude by Kaynat Chainwala, AVP-Commodity Research, Kotak Securities

“COMEX gold futures surged to a record high of $2,974 per ounce on Monday, driven by escalating geopolitical tensions and strong inflows into gold-backed ETFs. Concerns over the Israel-Hamas ceasefire, stalled Russia-Ukraine peace talks, and U.S. trade protectionism have sparked safe-haven buying. Investment demand remains robust, with World Gold Council (WGC) data showing a significant 48-tonne inflow, valued at $4.6 billion, into North American gold-backed ETFs last week, the largest weekly increase since April. Additionally, SPDR Gold holdings rose to 904.38 tonnes, the highest since August 2023. Today, gold dipped slightly to around $2,953 per ounce, though a sharp decline seems unlikely, as concerns over Trump's tariff proposals and Russia's largest-ever drone attack on Ukraine are likely to keep global risk appetite restrained. Meanwhile, U.S. consumer sentiment dropped to a 15-month low, and long-term inflation expectations reached a 30-year high amid growing fears that President Donald Trump’s broad tariffs could worsen inflation, highlighting a weak economic outlook and fueling expectations for another rate cut as early as July.

WTI Crude dropped below $70 per barrel yesterday, pressured by expectations of increased supply from Iraq due to the resumption of oil exports from Kurdistan, coupled with ongoing peace talks between Russia and Ukraine. However, prices rebounded to $70.9 per barrel later in the session after the U.S. imposed sanctions on brokers, tanker operators, and shippers involved in the sale and transport of Iranian petroleum products as part of the country’s shadow fleet. Furthermore, Iraq reaffirmed its commitment to the OPEC+ agreement, including voluntary reduction targets and compensation requirements. Today, oil prices have continued to climb, trading above $71 per barrel, as concerns over near-term supply tightness are evident in the widening WTI prompt spread. The market has shifted from contango early last week to bullish backwardation, with the spread now rising to around 30 cents.”