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

Comex gold surged to an all-time high of $2388.4 per ounce yesterday as recent statements from Fed Chair and FOMC officials bolstered expectations of a rate cut in September while better-than-expected US retail sales figures, could not shift market expectations for a September rate cut. In addition, reports that China's gold share of its overall reserves (including reserve position and SDRs at the IMF), despite a record high of 4.9%, remain low compared to the global average of 16%, suggests potential for increased official gold purchases. Although COMEX Gold retreated sharply from record highs yesterday on profit booking, Gold prices remain supported today and trades above $2470/oz as markets assess Fed pivot bets amid increasing signs that inflation is cooling toward the central bank’s target.

WTI crude gained steam and jumped above $83/bbl on Wednesday buoyed by a bigger than expected draw in US oil stocks and a weaker dollar. EIA reported an inventory draw of 4.9 million barrels for the week to July 12, following a 3.4-million-barrel decline in the previous week, pushing US crude inventories to 440.2 million bpd, around 5% lower than the five-year average for this time of year. Further, Bloomberg reported that Saudi Arabia's overseas oil shipments dropped to a 10-month low of 168 million bpd in June, only 250,000 higher than the lowest point during the pandemic. Oil prices may remain supported as signs of robust demand in the US outweighs demand concerns from top importer China. However, release of a document from the Third Plenum today wherein President Xi Jinping will unveil his long- term vision for China’s economy, may weigh on prices, if Beijing doesn’t address issues related to domestic consumption.

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