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

COMEX gold extended its declines for the second consecutive session on Monday, closing below $2,660 per ounce, following remarks from Fed Chair Jerome Powell, who tempered expectations for aggressive interest rate cuts at the 66th NABE Annual Meeting. Powell stated that the central bank would lower interest rates “over time,” while emphasizing that the overall US economy remains on solid footing and reiterating his confidence that inflation will continue moving toward the Fed’s 2% target. These comments led to a recalibration of market expectations regarding upcoming rate cuts and pushed the dollar higher toward the 101 level. The CME FedWatch tool now assigns a 61.8% probability to a 25 basis point rate cut at the November meeting, a significant increase from 46.7% just a day prior. Today, COMEX gold is trading flat as safe-haven bids from rising geopolitical risks in the Middle East counter caution ahead of US data releases and speeches from several Fed officials tonight.

Meanwhile, WTI crude oil prices surged above $69 per barrel yesterday as Israel intensified its assault on Lebanon following the killing of Hezbollah leadership last week, raising concerns about a broader regional conflict involving Iran. However, the likelihood of an all-out war between Iran and Israel remains low, as President Masoud Pezeshkian refrained from pledging a direct attack on Israel and adopted a relatively restrained tone in his speech at the United Nations. Additionally, reports surfaced that Libya is preparing to restore oil output after two rival factions reached an agreement last week, leading to a pullback in oil prices to $67.60 before closing flat at $68 per barrel. Today, WTI crude steadies above $68 as markets weigh Israel’s targeted operations against Hezbollah in southern Lebanon against the potential for increased Libyan oil supply. The upcoming OPEC JMMC meeting tomorrow is also highly anticipated, although Russian Deputy Prime Minister Alexander Novak has stated that the group will start restoring supply in December and is not discussing any new proposals.

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