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Base metal prices news: surviving the stress of the US Federal Reserve’s key rate hike

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Base metals price chart

On Wednesday, July 27, copper prices showed positive dynamics in London on hopes of strengthening demand for metals in China. The three-month LME copper contract rose 1.1% to $7,620 a ton by the close of trading, after falling to $6,955 a ton on July 15.

The overall market sentiment was bullish, boosted by positive US corporate reports that lifted the stock market.

Base metal prices news

According to Marex’s estimates, metal prices were supported by active short covering by speculators, who accumulated short positions and are now forced to make buybacks.

Meanwhile, copper inventories in ShFE warehouses and Chinese customs warehouses are at historic lows. Yangshan premium to the price of copper rose to $87 per ton, the highest value since December, indicating an increase in demand for imported metal.

Meanwhile, analysts at Citibank forecast that China’s economic recovery will stall and copper prices will fall to $6,600 a ton within 6-9 months. “We recommend selling copper and nickel in the coming week as a recession in Europe, a global economic slowdown and a serious supply increase move the commodities market into surplus,” the bank’s experts said.

Base metals price trends

According to economists polled by Reuters, a lot of key economies face the risk of a recession amid high inflation.

Current price of base metals: the cost of aluminum with delivery in 3 months at the LME did not change, amounting to $2,421.5 per ton. Zinc also remained unchanged at $3039/t. Nickel gained 0.8% to $21,750 per ton. Lead dropped by 0.2% to $2,020 per ton. Tin dropped by 1% to $24235/t.

In morning trading on Thursday, July 28, prices of most metals grew in London amid a weaker dollar, and prospects of less aggressive raising the key rate in the U.S., as well as optimism about China’s economic stimulus measures.

As, a three-month LME copper contract rose 1.8% to $777 per ton.

The U.S. Federal Reserve raised its key rate by 0.75% to curb inflation, which is in line with market expectations. Fed chief Jerome Powell’s comments after the rate hike are seen as “calmer,” prompting expectations of fewer possible base rate hikes in the remainder of the year.

Aluminum on the LME rose 1.6% to $2,460.5 per ton. Zinc with three-month delivery rose 2.4% to $3,126.5 per ton. Lead futures rose by 1% to $2,033 per ton. The price of nickel was down 0.4%, to $21730/t.

“More stimulus for [China’s] economy will help support confidence in the market in the short term,” said CRU Group copper market analyst He Tainyu. – However, pressure on prices will persist if China’s export market and real estate market remain in a weak position for a longer time.”

What is the base metals price outlook? The September copper contract rose 3% on the ShFE to 6,280 yuan ($8,937.65) per tonne.

Aluminum rose 4.1% to 18775 yuan per ton in Shanghai. The price of lead rose 0.7% to 15305 yuan per ton. Tin rose by 1.3%, to 195.23 thousand yuan per ton. Quotes on the price of nickel rose by 0.6%, to 169.06 thousand yuan per ton. These are base metals price trends we have today. 


Commodities

Price of gold falls on expectations of further US Federal Reserve rate hike

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price of gold falls

Price of gold falls: the price of the precious metal on Monday morning slightly decreased on the prospects of further interest rate hikes by the U.S. Federal Reserve, according to trading data.

The December gold futures price on the New York Comex Exchange is down $2.75, or 0.15%, to $1,788.7 a troy ounce. September silver futures went up 0.24% to $19.89 an ounce.

The precious metals market showed a negative trend on Monday morning, fueled by expectations of further interest rate hikes by the U.S. Federal Reserve after the release of the country’s labor market data.

Thus, the unemployment rate in July fell to 3.5% from the June level of 3.6%, while the number of the employed in non-farm industries increased by 528,000. Analysts had expected the figure to remain at June’s level. The increase in nonfarm payrolls was forecast at 250,000.

“Support from geopolitical tensions “was countered by the resilience of the U.S. dollar after the release of a credible U.S. jobs report and hawkish comments from Fed officials,” Ravindra Rao, vice president of commodities at Kotak Securities, told Bloomberg news agency.

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Commodities

Goldman Sachs oil price forecast 2022: Oil price forecast worsens in Q3 and Q4

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goldman sachs oil price forecast 2022

Current Goldman Sachs oil price forecast 2022: Analysts (NYSE:GS) believe another drop in Brent prices has been driven by low liquidity and growing multiple concerns, including the recession, China’s “zero tolerance” coronavirus policy and the country’s real estate sector, the release of strategic reserves in the US and Russia’s production recovery.

“We believe the possibility of higher oil prices remains high, even given all these negative factors, as the market is in a state of greater deficit than we have expected in recent months,” experts said.

Nevertheless, they worsened their forecasts for oil prices in the 3rd and 4th quarters of 2022 – to $110 and $125 per barrel, respectively, from $140 and $130 per barrel. The forecast for 2023 remained unchanged at $125/bbl.

The previous week the price of Brent had fallen by almost 9%; WTI had fallen by almost 10%. At the moment, futures are near the minimum marks for six months.

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Commodities

Why is oil rising in price today after a decline last week

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why is oil rising in price

Why is oil rising in price? The price of October futures on London’s ICE Futures Exchange for Brent amounted to $95.22 per barrel, which was $0.3 (0.32%) above the previous session’s closing price. At the end of previous trading these contracts grew by $0.8 (0.85%) up to $94.92 per barrel.

The price of WTI futures for September at electronic trades on the New York Mercantile Exchange (NYMEX) was $89.26 per barrel at that time, which was $0.25 (0.28%) above the final value of the previous session. By market close on Friday, the cost of these contracts grew by $0.47 (0.5%) up to $89.01 per barrel.

The previous week Brent had dropped almost 9% and WTI had fallen almost 10%. Currently, futures are near six-month lows.

The fall in Brent prices was caused by low liquidity and “a growing wave of concerns,” including the recession. China’s “zero tolerance” policy for the coronavirus, the release of strategic reserves in the U.S. and the recovery of production in Russia, experts wrote to Goldman Sachs (NYSE:GS).

They worsened their oil price forecasts for Q3 and Q4 2022 to $110 and $125 a barrel, respectively, from $140 and $130 a barrel. The 2023 forecast remained unchanged at $125 a barrel.

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