IGI Logo

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

Comex gold consolidated near record highs, closing higher for the fifth consecutive session, buoyed by a weaker dollar and declining US Treasury yields as the US Producer Price Index (PPI) rose less than expected by 0.1% in July, compared to the anticipated 0.2%, while core producer prices remained unchanged. Softness in PPI combined with expectations of a modest increase in the Consumer Price Index (CPI), set the stage for potential interest rate cuts, pushing the dollar to a five-month low. Additionally, safe-haven demand for gold increased due to geopolitical tensions, with the US warning of a potential imminent attack on Israel by Iranian forces or their proxies, and reports indicating that the Ukrainian military had established a foothold inside Russian territory. Today, COMEX Gold edged lower but trades above $2500/oz as market participants are focused on the upcoming CPI report and retail sales figures, seeking fresh insights into the health of the US economy. According to Bloomberg estimates, US CPI and Core CPI, both advanced 0.2% in July.

WTI crude oil prices fell around 2%, dropping to $78.20 per barrel, as the IEA highlighted weak Chinese oil consumption following OPEC's reduction of its demand growth forecast for 2024 and 2025. Data from the International Energy Agency indicated that global oil markets are poised to shift from a deficit to a surplus next quarter if OPEC proceeds with plans to increase supplies. The IEA also noted that even if OPEC+ does not restore output, global inventories could still rise by an average of 860,000 barrels per day next year, as non-OPEC+ supply is expected to grow by approximately 1.5 million barrels per day in both 2024 and 2025, surpassing anticipated demand growth. Today, oil prices are trading 0.7% higher, breaching $79 per barrel, driven by the high likelihood of a retaliatory strike by Iran on Israel as soon as this week and an API report indicating a decline of 5.2 million barrels in US oil inventories last week.

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