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

COMEX Gold prices fell to a one-month low of $2,650.30 per ounce last week, as investor sentiment shifted toward risk assets following Trump's election victory and the Republican Party’s successful bid to regain control of the US Senate. Gold briefly rebounded above $2,700 after the Federal Reserve’s widely anticipated 25-basis point rate cut. However, stronger dollar and rising Treasury yields kept gold under pressure, and it closed the week down 2% at $2,694.80 per ounce. Today, COMEX Gold extended its losses, slipping to $2,673 per ounce, as dollar held above 105 levels and expectations that fewer rate cuts will occur from the Fed, amid potential tax cuts and trade tariffs under the new administration. 

WTI Crude Oil experienced a sharp pullback, as investors were underwhelmed by the scale of China’s debt swap package, casting doubt on its ability to effectively stimulate the Chinese economy, especially in the face of potential US tariffs on Chinese exports. National People’s Congress (NPC) of China approved a 6 trillion yuan ($839 billion) debt swap program aimed at easing local government debt over the next three years. Meanwhile, Chinese crude oil imports fell 9% year-on-year in October, totaling 44.7 million metric tons. This marks the sixth consecutive month of declines and brings total imports for January-October down 3.4%, to 457 million metric tons. Oil prices had surged to a three-week high of $72.88, supported by supply disruption prospects, including potential tighter sanctions on oil exports from Iran and Venezuela, as well as a significant reduction in US oil output due to Hurricane Rafael. WTI Crude Oil fell for a second consecutive day on Monday, dipping below $70 per barrel, as persistent deflationary pressures in China highlighted the need for bolder actions to counter a potential trade war with the US. China’s consumer price index (CPI) rose by just 0.3% year-on-year in October, slowing from a 0.4% increase in September while, the producer price index (PPI) dropped 2.9%, following a 2.8% decline in September, continuing its deflationary trend that has persisted since September 2022.

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