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Futures for Gold Hinge on US Interest Rate Outlook
The precious metal gold has consistently been trading over $2,000 an ounce this week as the market is rife with anticipation about future US interest rates. This week, the Federal Reserve is expected to share the minutes from its recent meet, which is believed to contain significant policy-related insights. We presume that the Fed's prospective strategies will remain a crucial determinant for gold pricing in the near future. It is known that increased borrowing expenses typically have a detrimental effect on gold.
Gold holdings in recognized ETFs have seen a steady downfall with early anticipations of rate reductions from leading central banks diminishing. A fall of about 1 million ounces has been observed in this month alone.
Crude Oil Market Stability Amid Global Tension
Crude oil, as of this week, continues to be traded at a steady rate as the global market is approaching with caution the evolving situation in the Middle East. As of recent, a tentative ceasefire between Israel and Hamas has been proposed by the US while the UN Security Council is considering a resolution for another ceasefire, this one supported by Arab nations. Market sentiments are currently in flux, as geopolitical tension balances out the deflated demand outlook.
Moving onto India, it is observed that their import of Russian crude oil, particularly Sokol, has seen a decrease due to raised prices, interrupted exports of refined products, and difficulties with financial arrangements owing to a cap on Russian oil prices. Compared to last year's peak, this January's imports fell by around 35%. Furthermore, export of diesel and other refined products to Europe have faced challenges due to shipping disruptions.
Reported Decline in Indian Sugar Production
The Indian Sugar & Bio-energy Manufacturers Association (ISMA) recently released data showing that India's sugar production for the 2023/24 period (not taking into account sugar earmarked for ethanol), fell 2.5% when compared to the same period the previous year, reducing to 22.4 million tons. Furthermore, by mid-February, 505 mills were processing sugarcane, which is a slight increase from last year's 502 mills.
Latest reports from the Uganda Coffee Development Authority show that Uganda's coffee shipments for January experienced a substantial 19.8% monthly increase, reaching 481.6k bags, which is the highest since the preceding October. But if we compare on a yearly basis, exports have experienced a 2.5% hit, resulting from a smaller arabica harvest in the Elgon region. Cumulative shipments for the season till January have fallen by 2% YoY.
