Quote on Gold and Crude by Kaynat Chainwala, AVP-Commodity Research, Kotak Securities
Below the Quote on Gold and Crude by Kaynat Chainwala, AVP-Commodity Research, Kotak Securities
Comex Gold futures rebounded sharply from lower levels, closing marginally lower at $2,928.7/oz. Safe-haven demand, driven by ongoing geopolitical uncertainty, offset the impact of hot US inflation data. Israel is preparing for potential renewed hostilities in Gaza, while US-Russia talks raised hopes of an end to the war in Ukraine. US CPI rose above 3% YoY for the first time in six months, exceeding forecasts and December’s 2.9% increase. Core CPI climbed to 3.3% YoY, surpassing the projected 3.1%. This led interest rate swap traders to lower their expectations, now predicting just one quarter-point Fed rate cut this year, down from two before the data. Fed Chair Powell acknowledged progress in taming inflation but stressed that restrictive policies remain necessary unless inflation approaches the 2% target. Today, gold is trading near $2,950/oz as markets assess Trump’s protectionist trade policies. Investors are also awaiting PPI and unemployment claims data for further guidance on monetary policy.
WTI crude oil dropped nearly 3% yesterday to $71.20/bbl, weighed down by discussions to end the Russia-Ukraine war and a large increase in US oil inventories. US President Donald Trump held talks with Russian President Vladimir Putin to initiate immediate negotiations, signaling a potential diplomatic breakthrough. US oil stocks saw a larger-than-expected build of 4.1 million barrels for the week ending February 7. Meanwhile, OPEC maintained its global oil demand growth forecasts for 2025 and 2026 but warned that Trump’s trade policies could create market volatility. Today, WTI crude continues to decline, falling to $70.60/bbl, as expectations grow that disruptions to Russian crude flow may ease. The physical oil market is also showing signs of easing, with the WTI timespread narrowing to 11 cents a barrel in bullish backwardation, down from over 80 cents in late January. Oil market participants are awaiting the monthly report from the International Energy Agency for further insights.
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