Yesterday, spot gold closed lower at $1,987.8 an ounce, down by $9 or 0.44%, held below $2,000 an ounce after retreating from a near record high earlier this week, as investors weighed geopolitical uncertainties against a commodity-driven rise in inflation which prompted central banks to signal willingness to tighten monetary policy sooner. The ECB said it would phase out its large bond-buying program sooner than expected and paved the way for interest rate increases later this year, citing the Russia-Ukraine war which could drag on economic growth and push inflation higher. Investors are also bracing for the Federal Reserve policy meeting next week where it is set to raise interest rates by 25 basis points, with US inflation rising to a fresh 40-year high of 7.9% in February. Meanwhile, markets were kept on edge after the first round of talks between the Russian and Ukrainian foreign ministers failed to yield a ceasefire. MCX Gold April futures closed lower at Rs.52,878 per 10 gram, lower by 361 points. Bullion is still up 9% this year as investors seek a hedge against the threat of an inflationary shock to the global economy. Holdings in gold-backed exchange-traded funds have reached the highest since March 2021, with inflows of about 152 tonnes this year.

 

WTI Crude oil futures ended Friday’s session 3.1% higher at slightly above $109 per barrel, but posted a 5.7% decline on the week, the biggest weekly drop since November, as investors weighed efforts to bring more supply to the market against fears of an imminent Russia embargo. The Russian invasion of Ukraine has pushed the US and many Western oil companies to cease purchasing Russian oil and there were some talks about potential supply boost from Venezuela, Iran, and the United Arab Emirates. The US benchmark touched a 14-year high of $130.5 earlier this week as worries grew over further supply shortages in anticipation of the ban on imports of Russian oil.

 

 

Jigar M Trivedi

Manager – Fundamental Research Analyst (NonAgro Commodities)