IGI Logo

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

Comex Gold December futures saw a significant rebound from $2519.8/oz to $2554/oz on Friday driven by expectations of a Fed pivot next month following hints of an imminent rate cut from Federal Reserve Chair Jerome Powell. In his speech at the Jackson Hole Symposium, Powell indicated that further cooling in the job market would be unwelcome and expressed confidence that inflation is nearing the U.S. central bank’s 2% target. Today, COMEX Gold held its ground and trades above $2545/oz as Dollar slipped to 100.5, lowest since July 2023, and US 10-year treasury yields held below 3.8%, with markets now convinced of a September rate cut. According to the CME Fedwatch tool, traders are anticipating a 61.5% chance of a 25 basis point rate cut in September, while odds of a 50 basis point cut are 38.5%. However, sharp upside may be capped as traders cautiously await US Preliminary GDP, Core PCE, and consumer confidence to gauge the potential pace of further rate cuts in 2024.

WTI crude oil surged more than 2% in the last session and rebounded to $75.07 per barrel on Friday, fueled by optimism that the Fed was getting closer to its much-anticipated pivot. Today, WTI crude oil edged higher to $75.5/bbl, buoyed by growing concerns over a broader conflict in the Middle East, particularly with the recent escalation between Israel and Hezbollah. On Sunday, 100 Israeli warplanes swooped over southern Lebanon, taking out thousands of Hezbollah missile launchers that were about to fire thousands of missiles at northern Israel at a key intelligence center just north of Tel Aviv. Besides, ongoing ceasefire talks remain stalled as Hamas spokesman accused Israel of procrastinating and setting new conditions for a cease-fire and also criticized US President Joe Biden’s administration saying it is creating false hope by discussing an imminent agreement for electoral purposes.

Above views are of the author and not of the website kindly read disclaimer