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

Comex gold closed last week on a weaker note as safe-haven demand faded, following a ceasefire agreement between Israel and Hezbollah in Lebanon. Also, concerns about persistent inflation have raised doubts about the pace of rate cuts next year. Traders are currently pricing in a 66% chance of a quarter-point rate cut in December, up from 50% earlier in the month, while the likelihood of an additional rate cut in January stands at just 17%, according to the CME FedWatch Tool. The US PCE index, Fed’s preferred inflation gauge, rose by 2.3% year-over-year in October, matching estimates but higher than the 2.1% increase in September. Meanwhile, core PCE rose 2.8% compared to October last year, well above the Fed's target. Today, Comex gold prices dropped by more than 1%, falling to $2,645 per ounce, following a recovery in the US dollar. This was triggered by former President Trump's warning to BRICS nations, urging them to commit to not creating a new currency as an alternative to the US dollar or face 100% tariffs. Traders are also cautious ahead of the release of the key US jobs report, which may offer insights into the Fed's future policy decisions.

WTI crude oil prices fell more than 4% last week, dipping below $68 per barrel as the geopolitical risk premium eased. However, during the week, prices attempted a recovery as markets grew more cautious following Israeli attacks on Lebanon, just after the ceasefire agreement. Concerns over whether OPEC+ would unwind its voluntary production cuts also supported a brief rebound in oil prices. Today, WTI crude oil edged higher to $68.5 per barrel, driven by signs of a gradual recovery in China's economy. The Caixin manufacturing PMI rose to 51.5 last month, its highest level since June, up from 50.3 in October, marking the second consecutive month of expansion.

This boosted demand optimism ahead of the OPEC+ meeting on December 5, where the group is widely expected to consider delaying the planned restart of oil production in January, potentially for several months, due to a weak demand outlook.

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