Commodity outlook covering gold, crude, base metals and natural gas

Bullion Outlook — Geopolitical Premium Lifts Gold & Silver

Bullion markets extended gains for a third consecutive session, with spot gold decisively breaking above the psychological $5,000 per ounce mark as geopolitical tensions surrounding the U.S.–Iran standoff intensified. Safe-haven demand strengthened after reports of a potential U.S. ultimatum on nuclear negotiations and the largest American military deployment to the region since the pre-2003 Iraq conflict.

Silver mirrored the bullish momentum, reclaiming the $80 level as traders increased defensive positioning amid rising uncertainty. From a macro standpoint, expectations of near-term Federal Reserve rate cuts have moderated after stronger U.S. economic data and cautious remarks from Fed Governor Stephen Miran. FOMC minutes revealed a divided policy outlook, with some members open to tightening if inflation remains persistent. While geopolitical risk continues to support bullion, higher yields and a resilient labour market may cap aggressive upside in the near term.

Chanakya View: Safe-haven flows remain dominant, but sustained rallies may face resistance if rate-cut expectations continue to shift.

Crude Oil Analysis — Supply Risk Drives Six-Month Highs

WTI crude oil advanced toward $67 per barrel, marking a six-month high as markets priced in potential supply disruptions from the Strait of Hormuz amid escalating U.S.–Iran tensions. Iran’s output of over 3 million barrels per day — roughly 3% of global supply — remains a critical factor, with traders closely watching geopolitical developments that could impact shipping routes.

Supporting the bullish narrative, U.S. EIA data showed a sharp 9-million-barrel draw in crude inventories, the steepest decline since early September, reinforcing tightening supply dynamics. Reports suggesting a 15-day diplomatic window for Iran to reach a nuclear agreement have added volatility, as the risk of either a calibrated strike or broader conflict keeps risk premiums elevated.

Chanakya View: Near-term bias remains positive with volatility elevated; geopolitical headlines will continue to dominate price direction.

Base Metals — Aluminium Leads Gains, Copper Faces Structural Pressure

Base metals traded with a firmer tone led by aluminium, which gained over 1%, while copper edged higher intraday to around $12,836 per ton. Despite the rebound, copper remains on track for its fourth consecutive weekly decline — the longest losing streak since 2024 — weighed down by rising global inventories and soft industrial demand.

LME warehouse stocks have climbed to an 11-month high, with combined inventories across London, Shanghai and New York exceeding 1 million tons — levels not seen since 2003. Elevated prices appear to be dampening physical offtake, while a stronger U.S. dollar and hawkish Federal Reserve signals have pressured sentiment. With Chinese markets closed for the Lunar New Year, liquidity remains thin, and traders await clearer demand signals when the top consumer resumes activity.

Chanakya View: Short-term rebounds possible, but inventory overhang and macro headwinds keep copper’s broader trend cautious.

Natural Gas — Oversupply Keeps Prices Under Pressure

U.S. natural gas futures continue to trade below $3.00/MMBtu, hovering near a four-month low as rising production and lighter-than-expected storage draws ease supply concerns. Output from the Lower 48 states averaged 108.7 bcfd in February, approaching record levels, while the latest EIA data showed a 144 bcf withdrawal — well below both last year’s pace and the five-year average.

Although LNG feedgas demand remains steady, milder weather conditions have reduced heating demand, allowing storage deficits to narrow rapidly. Unless weather patterns shift significantly, near-term fundamentals remain soft.

Chanakya View: Supply growth and seasonal demand weakness suggest limited upside for natural gas in the short term.

Bullion & Crude analysis by Kaynat Chainwala, AVP Commodity Research, Kotak Securities:

Spot gold and silver extended gains today as escalating geopolitical tensions in the Middle East revived safe-haven demand. Bullion prices surged yesterday with gold briefly testing $5,020/oz and silver touching intraday highs of $79.50, driven by rising concerns over a potential U.S.–Iran conflict. Tensions intensified following comments from President Trump and reports of an expanded U.S. military presence in the region, the largest deployment since the Iraq invasion. However, gains were partially capped by a firmer U.S. dollar. Gold retreated to settle below the $5,000/oz mark, while silver eased toward $78.50 as dollar index climbed to a three-and-a-half-week high of 98.1 after weekly jobless claims fell to 206K and the Philadelphia Fed Business Outlook jumped to 16.3, both reinforcing signs of economic resilience.

Currently, gold has rebounded above $5,020/oz, while silver has surged past $81/oz as markets continue to weigh geopolitical risks against evolving Federal Reserve policy expectations. Investors remain cautious ahead of key economic releases, including PCE inflation, Q4 GDP, and flash PMI data. A softer-than-expected inflation reading could boost expectations for additional rate cuts later this year, supporting bullion prices. Conversely, a hotter inflation print may reinforce higher-for-longer rate expectations, potentially capping further upside in precious metals.

WTI crude oil edged lower to around $66.30/bbl after touching a fresh six-month high of $67.05/bbl earlier in the session, as traders adopted a cautious stance amid a shortened diplomatic timeline and escalating U.S.–Iran tensions. Oil prices climbed to $66.90/bbl yesterday after President Trump reportedly issued a 10–15 day deadline for Iran to reach an agreement over its nuclear program. The continued buildup of U.S. military presence in the region has heightened concerns about a potential military strike. Market participants are closely monitoring the risk of disruption to the Strait of Hormuz, a critical chokepoint that handles roughly one-third of global seaborne oil supply. Any blockade or supply interruption would significantly tighten global balances. Providing additional support, the EIA reported an unexpected 9 million-barrel draw in U.S. crude inventories, largely reversing the previous week’s 8.5 million-barrel build. Gasoline inventories declined by 3.2 million barrels, while distillate stocks fell by 4.6 million barrels, indicating firm underlying demand.