New Delhi [India], July 13 (ANI): Crude oil is likely to trade range-bound to higher while gold is expected to trade range-bound to lower in the coming sessions amidst fresh US-Iran strikes that has put the Strait of Hormuz back in focus and as markets price in the prospects for interest-rate hikes to combat inflation, according to a research report by domestic brokerage firm Nirmal Bang.
The report has put energy at the centre of the action. “On the New York Mercantile Exchange, Crude oil is trading higher. We expect crude oil to trade range-bound to higher for the day as oil jumped as the US and Iran exchanged fresh strikes, with the sides offering conflicting statements on whether the Strait of Hormuz remains open to shipping,” Nirmal Bang said.
As of 13:47 pm today, Brent crude traded nearly 3 per cent higher at USD 78.09 per barrel. The West Texas Intermediate was 2.8 per cent up at Rs 73.31 per barrel.
The US launched fresh missile attacks against Iran on Sunday in what has become a pattern of strikes and counterstrikes.
“Brent traded above $79 a barrel after gaining 5.4 per cent last week, while West Texas Intermediate traded near $74,” Nirmal Bang noted. It added that the uncertainty is reinserting a war premium into crude prices, which had erased gains after an interim peace deal.
The brokerage also warned, “a return to all-out war could see further disruption to global energy supplies through the Strait of Hormuz, which would risk curbing economic growth and demand for industrial commodities such as copper.”
“Gold and silver prices are trading slightly lower today on the international bourses. We expect precious metals prices on Indian bourses to trade range-bound to lower for the day” the brokerage said.
Gold and silver prices declined after the US and Iran exchanged fresh strikes over the weekend, sending energy prices higher and once more raising the prospects for interest-rate hikes to combat inflation.
The report said, “Gold headed for a weekly loss on Friday as investors assessed renewed fighting in the Middle East and the prospects for interest-rate hikes to combat inflation.” For gold traders, renewed conflict in the Middle East raises the prospect of the US Federal Reserve keeping interest rates higher for longer to deal with the inflationary impact of higher energy prices. Higher rates are a headwind for bullion, which doesn’t pay interest, the report said.
“On the London Metal Exchange, Base Metals are trading Lower. We expect base metals to trade range-bound to Lower for the day as aluminium fell after Emirates Global Aluminium said it restarted a key alumina plant in Abu Dhabi that was attacked in the early stages of the Iran war.” Aluminum dropped “1.9 per cent to settle at $3,139.50 a ton on the London Metal Exchange.” Copper was an outlier with “a second straight weekly advance as investors looked past potential demand headwinds presented by the resurgence in fighting in the Middle East.”
The report said “traders will look to US data that could provide the next steer on the Federal Reserve’s monetary policy outlook.” Until then, oil will likely draw support from geopolitical risk and gold will remain under pressure from rate expectations. (ANI)
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