India-US trade deal, oil prices & global tensions to guide markets this week

Mumbai, June 28: After ending the holiday-shortened week on a positive note, Dalal Street is likely to take cues from progress in the proposed India-US trade agreement, developments in the Middle East conflict, crude oil prices and foreign investor activity in the coming week.
Lower oil prices and improving risk sentiment helped benchmark indices post modest gains during the last week.
For the week, the Sensex advanced 0.39 per cent to close at 77,100.47, while the Nifty gained 0.18 per cent to settle at 24,056.
A sharp decline in crude oil prices emerged as the biggest positive trigger for the market. With tanker traffic through the Strait of Hormuz returning to normal and tensions in West Asia showing signs of easing, Brent crude prices retreated to near pre-conflict levels.
The decline in oil prices reduced concerns over imported inflation, the current account deficit and rising input costs for Indian companies.
Investor sentiment also improved amid growing expectations of an India-US trade agreement. Commerce and Industry Minister Piyush Goyal said India and the United States are close to concluding a trade deal following discussions with US Trade Representative Jamieson Greer. Market participants view the proposed agreement as an important step toward strengthening bilateral economic ties and boosting trade and investment flows.
At the same time, geopolitical developments in West Asia continued to remain on investors’ radar. The United States carried out strikes on Iran after a drone attack on a cargo vessel in the Strait of Hormuz, an incident that US President Donald Trump described as a violation of the ceasefire agreement. Earlier, a vessel near the coast of Oman was reportedly struck by a projectile, highlighting continuing tensions in the region despite ongoing diplomatic efforts.
Crude oil prices fell more than 3 per cent on Friday and were headed for sharp weekly losses as concerns over supply disruptions eased. The continued movement of oil tankers through the Strait of Hormuz helped calm markets and reduced fears of a major supply shock.
Meanwhile, the Indian rupee strengthened during the week, supported by lower crude oil prices and signs of improving foreign portfolio inflows. However, investors remained cautious over the possibility of further interest rate actions by the US Federal Reserve, which could influence global capital flows.
Gold, silver face fresh test
Gold and silver are likely to remain under pressure next week as investors assess the impact of renewed hostilities between the US and Iran, movement in crude oil prices and a raft of macroeconomic data, analysts said.
Market participants will closely watch manufacturing and services PMI from major economies, inflation data from the Eurozone, and the US nonfarm payrolls and unemployment figures for fresh cues on the trajectory of the Federal Reserve’s monetary policy.
Geopolitical developments are also expected to remain in focus after US-Iran negotiations came to a standstill following a sharp escalation in military conflict, they added.
“For gold and silver prices, the momentum still remains down and corrective,” said Pranav Mer, Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd.
On the Multi Commodity Exchange, gold futures for August delivery fell Rs 3,041, or 2.06 per cent, during the week to settle at Rs 1.44 lakh per 10 grams. Silver for the September contract plunged Rs 15,269, or 6.4 per cent, to Rs 2.23 lakh per kilogram.
“Gold remained under significant selling pressure last week, ending lower by 2 per cent, extending its week-on-week decline as persistent US dollar strength continued to weigh on precious metals,” Jateen Trivedi, VP Research Analyst, Commodity and Currency, LKP Securities, said.
He added that crude oil prices corrected sharply by nearly 10 per cent, which eased inflation concerns, reducing gold’s appeal as an inflation hedge, and investors continued to favour the US dollar over bullion.
In overseas markets, Comex gold futures fell USD 149.6, or 3.5 per cent, during the last week to close at USD 4,096.3 per ounce, while silver slumped USD 7.13, or 10.7 per cent, to USD 59.67 per ounce in New York.
Mer said gold recovered modestly on Friday on bargain buying after US Personal Consumption Expenditures data showed inflation rose at a slower pace than the previous month.
Continued gold purchases by China’s central bank, following fresh US-Iran strikes, and President Donald Trump’s threat of 100 per cent tariffs on the European Union also supported prices.
However, higher US Treasury yields capped gains, while silver remained under pressure due to weak industrial metals, a stronger dollar and subdued demand, he added.
Analysts said bullion prices will largely hinge on the upcoming US economic data, Federal Reserve officials and the direction of the US dollar. (Agencies)