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

COMEX gold surged to $2,689.40 per ounce yesterday as a significant drop in US consumer confidence heightened expectations for aggressive interest rate cuts by the Federal Reserve. The US Conference Board's Consumer Confidence Index fell sharply in September to 98.7, down from 105.6 in August, its largest decline in three years. Concerns over the labor market, combined with lower US Treasury yields and the US dollar nearing a 14-month low, further fueled the rise in gold prices. Additionally, Fed Governor Michelle Bowman highlighted persistent inflation risks and advocated for a cautious approach to rate cuts to avoid reigniting inflation. Today, COMEX gold prices reached a record high of $2,694.89 per ounce, and expected to hold gains as the CME FedWatch Tool now indicates a 62.2% chance of a 50 basis point cut in November, up from just 29% a week ago. Ongoing fears of an escalating Israel-Hezbollah conflict are likely to enhance gold's appeal as a safe-haven asset.

WTI crude oil prices surged above $72 per barrel yesterday due to concerns about potential supply disruptions in the US from hurricane threats, escalating conflict in the Middle East, and an improving demand outlook driven by fresh stimulus in China. Chinese Governor Pan Gongsheng announced sweeping stimulus measures aimed at achieving the country’s annual growth target of around 5%. In the Middle East, Israel conducted strikes across southern Lebanon, resulting in nearly 500 fatalities—the deadliest day of conflict since the 2006 war with Hezbollah. Moreover, the looming threat of a second hurricane in two weeks has prompted US oil producers to evacuate personnel from offshore platforms in the Gulf of Mexico. Today, oil prices steadied around $71.30 per barrel, amid rising geopolitical risks related to the Israel-Lebanon situation and expectations of a draw in US EIA oil inventories. Iran's President Masoud Pezeshkian stated that Israeli attacks in Lebanon “cannot go unanswered.” Meanwhile, the API reported a significant draw of 4.339 million barrels for the week ending September 20.

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