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

Comex gold prices surged to fresh all-time high of $2,614.60, driven by the Federal Reserve's aggressive 50 bps rate cut. Fed Chair Jerome Powell emphasized the importance of maintaining labor market strength while adjusting monetary policy. Initially, prices retreated to $2,575 per ounce as Powell warned against expectations of continued aggressive rate cuts. However, gold rebounded as the dollar weakened from 101.47 to 100.5, coupled with increased safe-haven buying due to escalating geopolitical tensions in the Middle East, particularly following attacks on Hezbollah members in Lebanon. Today, Comex gold reached a new all-time high of $2,619.60 per ounce, as markets reacted to weekly jobless claims numbers, which dropped by 12,000 to 219,000, the lowest level since May, bolstering expectations for a soft landing in the US economy.

WTI crude oil prices surged above $72 per barrel, driven by a significant Federal Reserve rate cut and escalating tensions in the Middle East. Israel’s Defense Minister, Yoav Gallant, announced a “new phase” in the conflict with regional Islamist groups, raising concerns about a broader conflict that could involve Iran, an OPEC member. Oil prices briefly dipped below $70 per barrel due to signs of weakening U.S. demand and ongoing worries about the Chinese economic outlook. According to the Energy Information Administration, US gasoline demand has dropped further below 9 million barrels, while jet fuel consumption has declined for third consecutive week. Today, crude oil prices edged down to $71.80 per barrel, but the downside is likely to be limited as Israeli military has reportedly advised residents in northern communities to stay close to shelters and limit outdoor activities due to the potential for retaliation from Hezbollah. Additionally, EIA data showed crude stockpiles at the key storage hub in Cushing, Oklahoma, are significantly below the five-year seasonal average.

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