Kotak Neo Commodity Watch | Gold, Silver Ease Ahead of Fed Minutes; Oil Rebounds as OPEC+ Supply Outlook Caps Gains

Commodity markets traded mixed in early trade on Tuesday, with crude oil recovering after the previous session's sharp decline, while precious metals came under mild pressure ahead of the release of the US Federal Reserve's June meeting minutes. The yellow metal slipped as investors avoided fresh positions before the policy update, although easing expectations of further Fed rate hikes continued to provide underlying support to bullion.

Spot gold traded near $4,160 an ounce after recording its first weekly gain since May, supported by weaker-than-expected US employment data released last week. June payroll growth slowed sharply, while April and May payroll numbers were revised lower. The softer labour market data reinforced expectations that the Fed could adopt a less aggressive policy stance, helping bullion hold on to most of last week's gains. Silver also edged lower after last week's rally as investors booked some profits ahead of the Fed minutes, even as the softer dollar helped limit losses.

Crude oil recovered from Monday's sell-off, with Brent crude futures rising to around $72.29 a barrel and WTI crude trading near $68.84 a barrel. The rebound remained measured as markets continued to assess the impact of higher OPEC+ output on global supplies. The producer group has approved another increase of 188,000 barrels a day from August as it continues to unwind voluntary production cuts announced in 2023.

Improving tanker movement through the Strait of Hormuz has eased immediate concerns over supply disruptions, although geopolitical developments in West Asia continue to remain on traders' radar after reports of attacks on commercial vessels in the region.

Base metals offered a mixed picture. Copper held firm above $13,400 a tonne, supported by expectations of a less aggressive US monetary policy stance, while aluminium remained under pressure as improving supply from West Asia and higher production in China and Indonesia added to availability.

With the economic calendar relatively light this week, attention has shifted to the minutes of the Federal Reserve's June 16-17 policy meeting, scheduled for release on Wednesday. Investors will look for fresh signals on the US interest rate outlook after last week's weaker labour market data tempered expectations of aggressive policy tightening.

Kotak Neo Commodity Research expects volatility across bullion, energy and base metals to remain elevated as markets balance shifting monetary policy expectations with evolving global supply dynamics. The research retains a sideways-to-bullish view on MCX Gold (August) and MCX Silver (September), while MCX Crude Oil (July) is expected to trade in a broad range.

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