$100+ Crude? Rupee at 90? Gold at ₹1 lakh? Kotak's Anindya Banerjee explains what's coming
As crude oil prices surge and gold hovers near ₹1 lakh, investors are bracing for a volatile Q3 driven by intensifying
Middle East tensions
.
In an exclusive conversation with ETMarkets, Anindya Banerjee, Senior VP and Head of Research – Currency, Commodity & Interest Rate at
Kotak Securities
, decodes the ripple effects of the
Iran-Israel conflict
, the potential disruption at the Strait of Hormuz, and how these shocks could push crude above $100, weaken the Indian rupee to 90 vs US dollar, and reshape the global commodities landscape. From de-dollarization trends to retail gold strategy, Banerjee lays out a detailed roadmap for what's ahead.
by Taboola
by Taboola
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Excerpts:
Crude Oil Outlook Amid Escalating Tensions
Q. Brent crude has surged nearly 13% in the last 10 days due to the Iran-Israel conflict. On top of that, the US has reportedly attacked Iranian nuclear bases like Fordow, Natanz, and Isfahan. What are your near-term and one-month projections for crude prices? Also, Goldman Sachs has projected $110 levels—is that realistic?
Anindya Banerjee:
In the short term, oil prices are likely to stay supported due to rising geopolitical risk. These tensions create what's called a "risk premium," which can push prices higher. However, over the medium to long term, if the conflict de-escalates, we may see prices soften as the risk premium fades.
The real wildcard here is the Strait of Hormuz, through which nearly 20% of the world's oil supply transits. If that becomes a chokepoint, prices could spike significantly. For context, during the Russia-Ukraine war in 2022, oil jumped from $60 to nearly $140. Iran accounts for only 1.5–2% of global supply, which is why prices are still under $80. But if the Hormuz route is disrupted, the impact could be much larger.
Impact of $100 Crude on India
Q. What would it mean if oil crosses $100? How significant is that mark?
Anindya
: For oil-importing countries like India, it would mean a direct rise in the oil import bill. The impact will depend on whether India can still negotiate discounts, as it did with Russian oil. If crude crosses $100, we can expect pressure on Indian assets, bonds, the rupee, and even equities.
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Gold's Rally and Outlook
Q. Till a few days back, gold was hovering around ₹99,000 per 10 grams. It saw a major rally this June. How much more upside is left due to geopolitical tensions? And what are your short-term levels?
Anindya:
Geopolitical risks have pushed gold higher, but historically, such events only offer short-lived support. Sustainable upmoves in gold are driven more by financial factors—central bank buying, dollar weakness, inflation hedging, etc.
Currently, gold is in a consolidation phase after a 30–35% rally since November 2023. On the international market, the short-term range is $3,280–$3,440. On MCX, the range could be ₹97,000–₹1,01,000. A weaker rupee is supporting MCX prices even as global gold consolidates.
Central Banks and De-Dollarization
Q. Central banks have been net buyers of gold. Do you expect this trend to continue in H2 2025?
Anindya:
Yes, absolutely. This is a structural trend. Central banks are de-dollarizing and shifting FX reserves into gold. A recent World Gold Council survey confirms this. Trade wars and global uncertainties are accelerating this trend. Gold is now the second-largest reserve asset for central banks globally, after the US dollar.
Rupee & Bonds Under Pressure
Q. The rupee and government bonds have been under pressure lately. What's driving this weakness?
Anindya:
Two key factors: rising oil prices and FPI outflows. Both have increased demand for dollars. While the RBI will intervene to reduce volatility, ₹87/USD is a critical support. If oil crosses $80 and tensions escalate, the rupee could head toward ₹89–90/USD.
Top Commodity Bets if Conflict Escalates
Q. Which commodities do you expect to outperform in Q3 if tensions worsen?
Anindya:
Crude oil will lead, and this will impact the entire value chain, chemicals, petrochemicals, and fertilizers. This could also raise input costs for the agri sector.
On metals, copper looks promising due to supply deficit. Silver is even more interesting; it's a dual play on gold and copper, combining industrial and monetary attributes. If I had to pick one commodity for the next few months, it would be silver.
Global Events to Watch
Q. What are the key events investors should track amid global turmoil?
Anindya:
Three major events:
US Fed Meeting – Any rate decision will impact commodities.
July 4th Deadline – The end of the US-China trade ceasefire. If tariffs return, volatility will rise.
Strait of Hormuz Situation – Escalation here could spike oil and impact currencies and equities.
Retail Strategy for Gold Investment
Q. Should retail investors buy gold now or wait? And what's the best way to invest—physical, digital, or ETFs?
Anindya:
Gold's medium-to-long-term outlook is positive. Current corrections are good accumulation opportunities. Any level below ₹98,000 is a buying zone.
For those with a higher risk appetite, silver may offer better returns in the short term.
Investment avenues:
Physical Gold
MCX/NSE Derivatives
Gold ETFs
The choice depends on risk profile and investment goals.
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