Gold Glitters Amid a Narrow Range Trading

Over the last two weeks, the commodities market displayed cautious activity with investors trading within narrow margins, eagerly awaiting pivotal economic data and insights from Federal Reserve officials. 

Gold prices soared, hitting a record high of ₹65,000 per 10 grams in the national capital, a ₹800 increase driven by strong international trends—the session before saw gold closing at ₹64,200 per 10 grams. At the time of writing, the price of 24-carat gold stands at ₹65,000 per 10 grams, reflecting an ₹800 increase influenced by positive international market trends. 

Silver also saw a significant uptick, with prices jumping ₹900 to reach ₹74,900 per kilogram, up from ₹74,000 in the previous session. Internationally, gold prices on the Comex market rose to USD 2,110 per ounce, an over 1 per cent increase from its last close. [EasyDNNnews:PaidContentStart]

*Gold price levels mentioned in the chart show the high achieved in December 2023. The prices mentioned are for USD/Oz 

The rise in gold prices can be attributed to anticipations of a possible rate cut by the US Federal Reserve in June, leading to a notable increase of over ₹2,400 in gold prices on the Multi Commodity Exchange (MCX) over three days. 

Oil prices dipped slightly in the past fortnight, amid concerns about China's demand growth, the largest crude importer - countered by indications of supply restrictions from major producers. The drop was also supported by a declining U.S. dollar, making oil more affordable for non-dollar buyers. 

Brent crude futures saw a modest decline of 13 cents to USD 81.91 a barrel, while U.S. West Texas Intermediate crude dropped 11 cents to USD 78.04 a barrel. 

However, oil prices found support from a weakening U.S. dollar and the news that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) decided to prolong their production reductions of 2.2 million barrels per day until the end of the second quarter. This decision has led to a somewhat constrained supply, especially in Asian markets, compounded by disturbances in oil tanker traffic due to attacks in the Red Sea by Yemen's Houthi militia, resulting in delayed oil shipments. Concerns about China's economic growth target for 2024, set at about 5 per cent without major stimulus initiatives, have raised doubts about demand growth in the country for the year. 

The forthcoming OPEC+ meeting is now key, with producers expected to extend voluntary production cuts to stabilise the oil market. WTI Crude oil is testing resistance in the USD 79.50-80 per barrel range, and a breakout could push prices towards USD 84 per barrel. 

LME base metals had a varied performance amid worries over China's economic situation and reduced local government borrowing. Official PMI data showed a fifth month of factory activity contraction in February, exacerbating concerns about the debt-heavy property sector and tepid investment climate. Nevertheless, there's optimism for a demand revival in March and April, particularly from China, the top metals consumer. 

In the upcoming week, market watchers will focus on the US ISM Services PMI, Jerome Powell's testimony, the ECB policy meeting, and US employment data. The consistency of US non-farm payroll data over the last three months has moderated expectations for near-term rate cuts. Still, any labour market weaknesses could boost gold prices, reflecting the Federal Reserve's reliance on economic indicators. 

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