Quote On Gold and Crude by Kaynat Chainwala, Senior Manager - Commodity Research, Kotak Securities
Below the Quote On Gold and Crude by Kaynat Chainwala, Senior Manager - Commodity Research, Kotak Securities
Comex gold futures closed at $3,043.8 per ounce on Thursday with modest gains after retreating from a record high of over $3,065. The pullback can be attributed to a surge in the dollar index to a two week high on resilient economic data, including lower-than-expected jobless claims, and an unexpected rise in February existing home sales. Gold jumped to an all-time high after the Fed's dot plot showed that FOMC members expect the benchmark federal funds rate to be around 3.9% by the end of 2025, indicating they foresee a half-percentage-point reduction in rates through next year. Market expectations for a May rate cut stand at 16.6% while traders are almost certain of a June reduction. Today, COMEX Gold holds below $3,040/oz but sharp downside may be limited as safe-haven bids from concerns about the potential impacts of Trump’s tariffs and tense geopolitical situation in the Middle East provide support. Markets remain on edge as Trump recently said both broad reciprocal tariffs and certain additional sector-specific tariffs would come into force on April 2.
WTI Crude closed 1.6% higher yesterday at $68.26/bbl, buoyed by supply concerns as the US tightened sanctions on Iranian crude, targeting entities, including a Chinese independent refinery. This move adds pressure on Iran to negotiate a new nuclear deal within two months. The risk premium edges higher, with Israel resuming airstrikes in Gaza, breaking a nearly two-month ceasefire and US strikes on Houthi targets in Yemen. Strong US economic data and robust fuel demand further supported prices. US crude oil stocks rose by 1.7 million barrels during the week ending March 14, while gasoline and distillates saw declines of 500,000 and 2.8 million barrels, respectively. Today, oil holds gains to trade above $68.3 a barrel due to lingering geopolitical tensions. Additionally, OPEC+ announced a revised schedule for seven members, including Russia, Kazakhstan, and Iraq, to make further oil output cuts of between 189,000 barrels per day and 435,000 bpd monthly, to compensate for overproduction, which will more than overtake the monthly production hikes planned for next month.
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