Commodity Insights

Precious Metals: Gold Rebounds as Safe-Haven Demand Returns

Gold extended its recovery for a second straight session, reclaiming the $5,050–5,090/oz zone as dip buying emerged after last week’s sharp correction. Prices have moved back above the key $5,000 psychological mark, supported by a softer U.S. dollar and renewed risk appetite. Despite recent volatility, gold remains up nearly 17% YTD, keeping the broader uptrend intact.

The recent sell-off followed an aggressive January rally driven by speculative flows, geopolitical tensions and concerns over Federal Reserve independence. That momentum briefly reversed, with silver witnessing a record single-day fall and gold posting its steepest decline since 2013. Fresh geopolitical stress resurfaced after U.S. forces downed an Iranian drone in the Arabian Sea, reviving safe-haven demand. Near-term direction will be influenced by U.S. ADP employment data and ISM Services PMI, with volatility likely to remain elevated.

Crude Oil: Geopolitical Risk Lifts Prices; Supply Concerns Resurface

WTI crude extended its advance to trade near $63.50 per barrel, supported by rising geopolitical risk across key Middle East transit routes. Prices gained nearly 2% after incidents involving U.S. forces and Iranian military activity near the Strait of Hormuz, a critical corridor for global oil flows.

Additional support came from industry data showing a sharp 11-million-barrel draw in U.S. crude inventories, pointing to tightening near-term supply-demand balances. Diplomatic uncertainty added to risk premiums as Iran signalled limits on broader negotiations with Washington. With inventories tightening and geopolitical risk elevated, crude remains biased to the upside in the near term, though sustained gains will depend on actual supply disruptions rather than threats.

Base Metals: Mixed Trend as Copper Lags Precious Metals

Base metals are trading on a mixed footing, with zinc and nickel posting gains, while copper and aluminium remain under pressure. Copper slipped nearly 1% to around $13,360/ton, giving up part of Tuesday’s rebound as rising inventories across Shanghai, London and Comex weighed on sentiment.

Unlike gold and silver, copper has not benefited from safe-haven flows, reflecting softer physical demand and comfortable near-term supply. However, buying interest from Chinese manufacturers on dips and proposals to boost strategic reserves continue to provide underlying support. Nickel rebounded on expectations of tighter supply following Indonesia’s move to cut mining permits.

Natural Gas: Sideways Trade After Sharp Volatility

U.S. natural gas prices are consolidating near $3.30/MMBtu, stabilising after Tuesday’s rebound that partially recovered Monday’s steep 25% selloff. Prices are being supported by mixed weather signals, with above-normal temperatures forecast for the Midwest and South, while colder conditions persist in the Northeast into mid-February.

Last week’s rally to a three-year high was driven by storm-related supply disruptions and a surge in heating demand, with nearly 15% of output temporarily offline. While production has since normalised, demand and LNG export flows remain firm. The market is likely to remain range-bound in the near term, with volatility tied closely to weather patterns and export demand.

Bullion and crude quote by Kaynat Chainwala, AVP Commodity Research, Kotak Securities: