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 closed below $2,900 per ounce on Monday as investors took profits amid growing recession concerns driven by trade policies under Trump. Investors were particularly worried that tariffs could exacerbate the risks of an economic downturn. In a televised interview, Trump acknowledged a "period of transition" but emphasized efforts to restore US wealth. However, the sharp decline in gold prices was limited due to a softer dollar and lingering trade war risks. US Commerce Secretary Howard Lutnick stated that Trump would not ease pressure on tariffs against Mexico, Canada, and China. Today, gold prices are trading above $2,900, supported by high geopolitical tensions. Russia reported a "massive" Ukrainian attack in Zaporizhzhia and a mall in the Kursk region, while Russian air defenses intercepted UAVs over Voronezh. Currently, the CME FedWatch Tool indicates a 97.0% probability of no rate changes at the March 19 Fed meeting, while expectations for a rate cut by June 18 have risen to 93.7%. Gold is likely to remain range-bound ahead of the US inflation numbers, as a hotter-than-expected inflation print could prompt traders to adjust their expectations of three rate cuts this year.
WTI crude prices dropped 1.5% yesterday as escalating US tariffs on key trading partners fueled concerns about demand, while OPEC+ confirmed plans to start unwinding a 2.2 million barrel per day cut from April. The sell-off in oil deepened, with prices falling to a near six-month low of $65.80 per barrel, driven by fears that the tariffs could trigger a slowdown in the US economy and signs of weakening demand from China, the world’s largest oil importer. China’s crude oil imports fell 5% year-over-year in the first two months of 2025, partly due to stricter US sanctions on vessels carrying Russian and Iranian oil, along with a Chinese port ban. Additionally, Saudi Arabia cut OSPs for Asia in April for the first time in three months, following OPEC+’s decision to go ahead with the planned increase in oil output. Today, oil prices continue to decline, trading below $66 per barrel, primarily due to the fallout from the tariffs. However, comments from US Energy Secretary Chris Wright, stating that the Trump administration is prepared to enforce sanctions on Iranian oil production, may help limit further declines.
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