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

Comex gold settled higher for a second consecutive session on Wednesday, reaching a three-week high of $2,687 per ounce, supported by weaker U.S. private payrolls data. The ADP Employment Report revealed that private sector job gains totaled 122,000 in December, falling short of the forecasted 140,000, while initial jobless claims improved to 201,000, below both the estimate and the previous week's 211,000. Gold saw a modest pullback from higher levels, closing at $2,672 per ounce, owing to Federal Reserve's more hawkish tone in the December's FOMC meeting meeting, which indicated a slower pace of policy easy due to persistent inflationary pressures. Today, Comex gold edged up to $2,680 per ounce, maintaining a two-day advance as traders awaited the official U.S. jobs report due Friday for further clues on the monetary policy outlook.

WTI crude oil experienced volatile movements, closing 1% lower, pressured by a smaller-than-expected draw in oil stocks and a significant rise in U.S. fuel inventories. The EIA reported an estimated inventory draw of 1 million barrels for the first week of 2025, while gasoline and distillates stocks increased by 6.3 and 6.1 million barrels, respectively. Additionally, a stronger U.S. dollar weighed on oil prices, pushing them toward $73 per barrel. The dollar surged above 109, despite the weaker private payrolls data, as the FOMC minutes signaled a cautious approach to easing in light of renewed inflation concerns, particularly considering the potential impact of President-elect Donald Trump’s policies. Today, crude oil prices remained under pressure, as a decline in Chinese consumer inflation for the fourth consecutive month in December raised deflation concerns. China's Consumer Price Index (CPI) rose just 0.1% year-on-year in December and 0.2% yoy in 2024 well below the 3% target, while factory deflation extended into its 27th month, albeit at a slower rate of 2.3%.

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