Global commodities markets to be focused on the outcome of Ukraine ceasefire talks

Bullion ended the week with a loss as expectations of a bigger rate cut faded, following an increase in US producer price inflation. U.S. producer prices rose by the largest amount in three years in July, likely due to the effects of tariffs. The recent speculation regarding a potential 50 basis point cut in interest rates by the Fed at its upcoming meeting in September was tempered by the higher producer price data, which negatively impacted bullion prices.

Throughout the last week, crude oil prices consolidated at the lower end of their range as investors awaited a face-to-face summit between Donald Trump and Vladimir Putin, an encounter that could potentially reshape crude flows from one of the world’s largest producers. Additionally, bearish reports from the IEA have added pressure on oil prices.

Natural gas prices have rebounded from a multi-month low, fueled by near-record flows to liquefied natural gas export facilities and forecasts predicting hotter-than-normal weather through the end of August. However, despite the recovery on Friday, natural gas prices saw a decline of nearly 3.0% for the week.

Except for copper, other industrial metals fell last week due to weak macroeconomic data from China, raising concerns about the demand outlook. Recent figures from China indicated that industrial output increased by 5.7% yoy, falling short of the 5.9% forecast and marking the slowest growth in eight months. Meanwhile, retail sales rose by only 3.7%, the weakest growth in six months and below the 4.6% consensus expectation.

 What to Watch: In the upcoming week, market attention will remain on the progress of the Russia-Ukraine peace deal. The price of crude oil and bullion may decline if a peace agreement becomes more likely. On the other hand, we anticipate a recovery in bullion and oil prices in the event of no deal. On the macroeconomic front, the July FOMC minutes, speeches from Fed members, and Fed Chair Powell’s address will impact commodity prices.

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Source: HDFC Securities Prime Research

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