The commodity market is exhibiting sharp divergence, with precious metals experiencing a robust rally while crude oil prices decline significantly. This shift is primarily driven by escalating expectations of a Federal Reserve interest rate cut, fueled by recent weak US labor data, contrasting with renewed concerns over a global oil supply surplus.
Gold prices surged by 2.06% to settle at ₹1,26,465, marking a high point buoyed by growing anticipation of an imminent Federal Reserve rate cut. Kedia Advisory noted the gains were supported by growing expectations of an imminent Federal Reserve rate cut. This dovish sentiment stems from data showing US companies shed an average of 11,250 jobs per week through late October, which strengthened the case for monetary easing.
Traders are now pricing in around a 68% probability of a 25-basis-point rate cut next month. The anticipated end of the prolonged US government shutdown also added a measure of stability, though safe-haven demand remains supported by broader global slowdown worries.
Silver prices mirrored this bullish trend, jumping sharply by 4.79% to settle at ₹1,62,091. The metal was buoyed by renewed expectations of a near-term US Federal Reserve rate cut following weak labor market data. ADP figures confirmed that US private employers shed an average of 11,250 jobs per week, reinforcing views that the Fed will likely lower rates in December.
Market participants now assign a 68% probability to a 25-basis-point cut. Momentum was further added by Fed Governor Stephen Miran’s call for a larger 50-basis-point reduction. On the supply front, silver inventories in London vaults saw an inflow of 1,674 tons from the U.S. and China in October, easing a tight liquidity situation, though borrowing costs remain historically high.
In stark contrast, crude oil prices declined sharply by 3.79% to settle at ₹5,198. This decline was primarily due to renewed concerns of an oversupplied global market. The pressure followed signals that OPEC+ members are gradually restoring production capacity while non-OPEC producers, particularly the US and Brazil, continue to ramp up output, raising fears of a widening supply glut.
Adding to the bearish sentiment, the International Energy Agency (IEA) projected in its latest World Energy Outlook that oil and gas demand could surprisingly continue to grow until 2050—a shift from its earlier view of a near-term demand peak—highlighting persistent dependence on hydrocarbons despite climate goals. US crude inventories surged by 5.202 million barrels in the week ending October 31, well above expectations, adding to the pressure.
The market remains cautiously optimistic on gold and silver due to the monetary easing prospects, while the crude oil segment faces downward pressure from a supply surplus that analysts project will worsen into the next year.
The commodity market is split: precious metals are surging while crude oil sharply retreats.
Gold prices jumped 2.06% to ₹1,26,465, and silver soared 4.79% to ₹1,62,091, both driven by strong expectations of a December Fed rate cut. Weak US labor data, showing private companies shedding an average of 11,250 jobs per week, has pushed rate cut probability to around 68%.
Meanwhile, crude oil prices fell sharply by 3.79% to ₹5,198 amid fears of a global supply surplus. The decline was fueled by the International Energy Agency’s (IEA) projection that global oil and gas demand could continue to grow until 2050, as OPEC+ and non-OPEC producers increase output. The market’s focus is now firmly on monetary policy for metals and supply dynamics for energy.
