Quote on Gold and Crude by Kaynat Chainwala, AVP-Commodity Research, Kotak Securities
Below the Quote on Gold and Crude by Kaynat Chainwala, AVP-Commodity Research, Kotak Securities
Comex Gold gained for the second consecutive session on Tuesday, closing above $2,925 per ounce, as the dollar tumbled to 105.5, its lowest level since December, amid escalating trade tensions between the US and its major trading partners. New tariffs of 25% on Canada and Mexico, and 10% on China, took effect on March 4, triggering retaliatory measures and boosting safe-haven buying. China imposed 15% tariffs on US agricultural goods and banned trade with certain defense companies, while Ottawa introduced phased levies on $107 billion worth of goods, and Mexico pledged countermeasures. Additionally, US Treasury yields fell as markets priced in potential Federal Reserve rate cuts. Today, gold is trading near $2,925, but sharp upside is limited as US Commerce Secretary Howard Lutnick suggested a possible tariff relief for Canada and Mexico. If an agreement is reached and levies are eased, it could put downward pressure on gold prices. Traders are also closely watching Services PMI data from major global economies and US private payroll numbers for insights into the global economic outlook.
WTI crude oil fell to $66.80 per barrel, lowest level since mid-November, as demand concerns, fueled by trade wars and OPEC+ plans to unwind production cuts in April, intensified bearish sentiment. Retaliatory tariffs from Canada, Mexico, and China followed President Trump's decision to impose sweeping import levies on Canada and Mexico, along with doubling an existing tariff on China. These developments are weighing on demand prospects, particularly as the market is already burdened by expectations of a surplus later this year. Oil prices extended losses for the third consecutive session amid tariff uncertainty. Oil prices may find some support, however, as China’s bullish growth target raised market hopes for additional fiscal stimulus amid the ongoing trade war with the US. China set its 2025 GDP target at around 5% and aims for a budget deficit of around 4% of GDP, up from 3% in 2024 and the highest since 2010, with a promise of a "special action plan" to stimulate consumption. Traders are also awaiting the EIA inventory report after the API reported an unexpected stock drawdown of 1.46 million barrels for the week ending February 28.
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