Quote on Gold and Crude by Kaynat Chainwala, AVP-Commodity Research, Kotak Securities
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Below the Quote on Gold and Crude by Kaynat Chainwala, AVP-Commodity Research, Kotak Securities
Comex gold prices surged past $2,700 an ounce on Wednesday, bolstered by falling US Treasury yields and strong safe-haven demand amid escalating geopolitical tensions. However, prices pulled back from higher levels due to a stronger dollar. Despite this, safe-haven bids stemming from heightened tensions in the Middle East, particularly following Israel's strikes on Hezbollah in Lebanon, helped limit the decline, allowing COMEX gold to close 0.5% higher at $2,691.30 per ounce. Today, Comex gold has continued its upward trend, reaching $2,700.60 earlier in the session, amid uncertainty surrounding the upcoming US elections and anticipation of key US economic data. US Retail sales and jobless figures are being closely watched for insights into the pace of Federal Reserve easing this year. So far, signs of resilience in the US economy have led to speculation that the Federal Reserve may adopt a less aggressive approach to rate cuts.
WTI Crude prices held declines on Wednesday after a 4% drop in the previous session as traders assessed the Middle East situation, particularly concerns over potential Israeli actions targeting Iran's energy infrastructure. Earlier this week, oil prices dipped below $70/bbl following reports that Israel intended to limit its retaliatory strikes in Iran to military targets and major oil agencies lowering their demand forecasts for 2024. The International Energy Agency projects a significant surplus in the global oil market next year, while OPEC has reduced its demand growth forecasts for 2024 and 2025. Despite this, prices recovered to close above $70/bbl yesterday, bolstered by unexpected oil drawdowns reported by the API. According to the API report, US crude oil inventories fell by 1.58 million barrels for the week ending October 11, with distillate and gasoline inventories decreasing by 2.672 million barrels and 5.926 million barrels, respectively. Today, WTI crude oil has edged up to $71.11 per barrel, driven by renewed concerns over supply disruptions due to intensified Israeli airstrikes on Lebanon and an oil leak near Kharg Island, Iran's primary export terminal in the Persian Gulf.
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