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

Comex Gold futures surged to a one-month high of $2,757.90 per ounce on Thursday as US Treasury yields softened owing to US economic data that bolstered expectations the Federal Reserve could lower interest rates this year. US unemployment claims rose to 217K for the week ending January 11, above the forecast of 210K, while December retail sales increased by 0.4%, below the expected 0.6%. These figures, coupled with softer-than-expected inflation data, sparked speculation of two Fed rate cuts by the end of 2025, possibly starting in June. Fed Governor Christopher Waller further stoked this optimism, indicating that if economic data continues to weaken, the central bank might implement three or four rate cuts this year. Today, Comex Gold dipped slightly below $2,750 per ounce ahead of upcoming US housing and industrial production data. Still, gold remains on track for its third consecutive weekly gain, buoyed by revived rate cut expectations.

WTI crude oil prices dropped to $77.90 per barrel yesterday, retreating from the five-month high of $80.77 per barrel reached in the previous session, following the easing of geopolitical risks after the ceasefire between Israel and Hamas. However, prices closed at $78.70 per barrel, recovering from earlier losses, due to tighter sanctions on Russia and concerns that the incoming Trump administration may impose stricter sanctions on Iran, another key oil producer. Today, crude oil is trading above $79 per barrel and is set for a fourth consecutive weekly gain, driven by fears of potential disruptions in global oil flows. Markets are closely watching Trump’s sanctions strategy for Russia, with reports suggesting his advisers are crafting a comprehensive strategy to facilitate a Russia-Ukraine diplomatic resolution while simultaneously tightening measures on Iran and Venezuela. Additionally, stronger-than-expected economic data from China is providing further support to oil prices. China's economy grew by 5.4% in the December quarter, pushing full-year GDP growth to 5.0% for 2024, in line with the official target. Retail sales and industrial output also exceeded expectations in December, signaling that China's stimulus blitz since late September has had the desired impact on reviving growth.

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