Commodities – Sentiments remain bullish regarding gold; Zinc prices down due to high production in China

Gold prices fell on Thursday due to traders exercising caution about potential future rate cuts by the Federal Reserve and the impact of a stronger dollar, which both dampened the recent rise in the price of precious metal. However, during the Asian trading session on Friday, bullion made a recovery and traded higher, with overall sentiment remaining bullish.

Meanwhile, yesterday’s better-than-expected US economic data has bolstered the US dollar, aiding its recovery. Weekly initial unemployment claims fell by 33,000 to 231,000, better than expectations of 240,000. Additionally, the September Philadelphia Fed business outlook survey rose by 23.5 points, reaching an 8-month high of 23.2, which is significantly higher than the anticipated value of 1.7.

Crude oil prices declined during a volatile trading session on Thursday after US President Donald Trump suggested that he preferred lower prices over sanctions as a strategy to pressure Russia into ending its war in Ukraine. Trump asserted that the conflict would conclude “if the price of oil comes down” and reiterated his calls for nations to cease purchasing fuel from the OPEC+ member. While geopolitical risks, including attacks on Russian energy infrastructure, continue to contribute to a risk premium, these concerns are insufficient to counterbalance worries about surplus production.

Natural gas prices dropped more than 5.0% on Thursday, with losses continuing after the EIA announced a larger-than-expected increase in storage. Firms injected 90 bcf of gas into storage during the week ending September 12, exceeding forecasts of 81 bcf. This figure is also higher than the 56 bcf injected during the same week last year and surpasses the fiveyear average build of 74 bcf.

Zinc declined the most among industrial metals, influenced by reports that China’s zinc production in August reached its highest monthly level since the first quarter of 2024.

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Source : HDFC Securities Prime Research

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