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 closed modestly lower at $2,765 per ounce as the U.S. dollar retreated from its highs. Support for the metal also came from ECB policymakers, who signaled further rate cuts. Gold prices remained buoyed by safe-haven buying, especially after President Trump expanded his tariff threats on Wednesday, proposing a 10% tariff on goods from China and the EU, along with plans to impose 25% tariffs on goods from Mexico and Canada by February 1. Meanwhile, gold prices did not react significantly to U.S. Initial Jobless Claims, which rose to a six-week high of 223K for the week ending January 18, slightly exceeding the expected 220K. Today, gold prices surged to a three-month high of $2,785 and are set for a fourth consecutive weekly gain, as President Trump reiterated his intention to impose import levies on Europe, China, the EU, Canada, and Mexico to boost U.S. manufacturing during his address at the World Economic Forum. Investors are expected to keep an eye on Flash PMIs for early indications of economic activity in major global economies, as well as U.S. housing data and University of Michigan Consumer Sentiment, for further insights into the state of the U.S. economy.
Comments by U.S. President Donald Trump, in which he stated that he would ask Saudi Arabia and OPEC to lower prices during his virtual address at the World Economic Forum in Davos, caused WTI crude oil prices to drop to a two-week low of $74.10 per barrel on Thursday. Additionally, Trump promised lower taxes to global elites who bring manufacturing to the U.S. and threatened tariffs on those who do not, fueling concerns about potential trade wars. Meanwhile, the EIA reported a decrease of 1.017 million barrels in U.S. crude oil stocks, extending declines for the ninth consecutive week, which contrasted with the API report that had estimated a build of 1 million barrels. Oil prices have been highly volatile in January, surging to $80.70 per barrel in mid-January due to unprecedented U.S. sanctions on Russia. However, the Gaza ceasefire, Trump’s push to boost U.S. oil production, and concerns that potential U.S. tariffs on China and the EU could reduce oil demand have caused a sharp pullback in prices. Today, crude oil prices continue to decline and are set for the first weekly drop of the year, as Trump’s tariff threats, his push for higher U.S. oil output, and his vow to ask OPEC to "bring down the cost of oil" may keep traders on edge.
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