Jaipur: Indian commodity markets remained volatile on Friday, with gold and silver facing profit-booking after their recent rally, while crude oil continued to trade at elevated levels amid geopolitical risks and concerns over potential supply disruptions.
The moves in global commodities are important for Indian investors because they can influence inflation, the rupee, corporate margins and ultimately the performance of key sectors in the equity market.
Gold, Silver Under Pressure After Recent Rally
Spot gold fell to around $4,344 an ounce on Friday after touching its highest level since June 5 a day earlier. US gold futures also declined around 0.4%.
The immediate trigger was profit-taking after the recent rally. Expectations around US monetary policy also remain important for bullion prices. Softer US inflation data have strengthened expectations of easier monetary policy, which is generally positive for gold. However, with much of that optimism already reflected in prices, investors have started booking profits at higher levels.
Silver also came under pressure, falling more than 1% in the international market.
In India, MCX gold's October contract had closed at around ₹1,53,373 per 10 grams on August 13, with bullion prices remaining sensitive to global movements in the dollar, US bond yields and interest-rate expectations.
Crude Oil Remains the Bigger Risk for India
The crude oil market is currently being driven by a different set of factors. WTI crude was around $81 per barrel, while Brent was near $87 per barrel, with geopolitical tensions and concerns surrounding the Strait of Hormuz remaining key risks for global supply.
The possibility of disruptions in the Gulf region has kept a risk premium in crude prices. Some market estimates suggest that Brent could move towards $100 per barrel if tensions persist and supply risks increase.
For India, this is particularly important because the country remains heavily dependent on imported crude oil.
Higher crude prices can increase India's import bill, put pressure on the rupee and raise inflationary risks. Companies with high fuel and transportation costs could also see pressure on margins.
Impact on Indian Stock Market
A sustained rise in crude oil prices could create pressure on airlines, paints, tyres, logistics and other fuel-sensitive businesses. Higher input costs can reduce margins unless companies are able to pass the increase on to consumers.
On the other hand, a decline in crude prices could provide relief to these sectors.
Gold has a different impact. Record or near-record domestic gold prices can affect jewellery demand, although the impact varies across jewellery retailers, bullion businesses and gold-financing companies.
The broader equity market could also be affected indirectly through inflation and currency movements. If crude remains elevated for an extended period, investors may become more cautious about sectors that are sensitive to input costs.
Gold Rates in Major Indian Cities
On August 14, available retail rates for 24K gold were around ₹15,289 per gram, while 22K gold was around ₹14,015 per gram.
Approximate 24K/22K rates per gram were:
| City | 24K Gold | 22K Gold |
|---|---|---|
| Chennai | ₹15,317 | ₹14,040 |
| Mumbai | ₹15,289 | ₹14,015 |
| Delhi | ₹15,304 | ₹14,030 |
| Kolkata | ₹15,289 | ₹14,015 |
| Bengaluru | ₹15,289 | ₹14,015 |
| Hyderabad | ₹15,289 | ₹14,015 |
| Ahmedabad | ₹15,294 | ₹14,020 |
Actual retail prices can vary between jewellers because of local taxes, making charges and other costs.
What Should Investors Do Now?
Investors should avoid chasing sharp commodity rallies. In gold, staggered buying may be more appropriate than putting a large amount of capital into the market at once, particularly after a strong run-up.
For equity investors, crude oil is likely to remain the more important near-term indicator. Investors should closely monitor Brent crude, the rupee-dollar exchange rate, US Federal Reserve expectations and developments around the Middle East.
A prolonged period of high crude could favour companies that benefit from lower energy costs while creating pressure on fuel-sensitive sectors.
Aurelius Business View
The commodity market is currently presenting two different stories: gold is dealing with profit-booking after a strong rally, while crude oil continues to carry a geopolitical risk premium.
For Indian investors, the direction of crude oil may be particularly important because it can influence inflation, the rupee and corporate profitability. Gold, meanwhile, remains a key hedge against uncertainty, but investors should be cautious about entering aggressively after sharp rallies.
Disclaimer: This article is for informational and educational purposes only and should not be considered investment advice. Investors should conduct their own research and consult a SEBI-registered financial adviser before making investment decisions.
