Commodities
Gold breaks $2,600 barrier as Fed cut bets prolong historic run
By Anushree Mukherjee
(Reuters) – Gold soared above the $2,600 level on Friday for the first time, extending a rally boosted by bets for further U.S. interest rate cuts, and rising tensions in the Middle East.
was up 1.3% at $2,620.63 per ounce by 1:43 p.m. ET (1743 GMT), while U.S. settled 1.2% higher to $2,646.20.
Bullion’s latest rally got a fillip after the Federal Reserve initiated an aggressive easing cycle on Wednesday with a half-percentage-point reduction, adding to the appeal for gold, which pays no interest.
Prices of the safe-haven asset have climbed 27% in 2024, their biggest annual rise since 2010, as investors also sought to hedge uncertainties spurred by prolonged conflicts in the Middle East and elsewhere.
The record rally could be poised for a correction, analysts said.
“Clearly, there’s still some buying activity associated with the Fed’s decision to begin their easing cycle with a big cut,” said Daniel Ghali, commodity strategist at TD Securities.
However, “the source of this buying activity remains off our radar,” given ETF inflows are relatively marginal and Asian buyers are still on a buyers’ strike, all signs of “extreme positioning,” Ghali added. [GOL/ETF]
The record rally has eroded retail demand in top consumers China and India. [GOL/AS]
The rally in gold “should not go on forever,” Commerzbank (ETR:) said in a note, citing the expectation for rate cuts of only 25 basis points each at the Fed’s next two meetings.
Still, some analysts said gold could see more upward spikes.
“Geopolitical risks, such as ongoing conflicts in Gaza, Ukraine, and elsewhere, will ensure to sustain gold’s safe-haven demand,” Forex.com analyst Fawad Razaqzada said in a note.
Continued weakness in the dollar, which makes gold cheaper for holders of other currencies, offered additional tailwinds, analysts said. [USD/]
Elsewhere, spot silver gained 1.2% to $31.16. Platinum fell 1.1% to $978.50 and palladium shed 0.5% to $1,074.84.
Investing.com–Oil prices rose on Friday, heading for a second consecutive weekly gain as optimism around China’s economic growth lifted market sentiment.
The were last up 0.8% to $76.6 a barrel, and expiring in February was up 1.1% to $73.3 a barrel.
Oil had gained sharply in the previous session after data showed growth in Chinese factory activity.
Both contracts were on course for second consecutive weekly gains, with WTI 1.3% and 0.9% higher.
Chinese stimulus hopes support oil prices
China’s grew in December, a Caixin/S&P Global survey showed on Thursday, but at a slower pace than expected.
An official survey released on Tuesday also showed that China’s manufacturing activity barely grew in December. However, services and construction fared better, with the data suggesting that policy stimulus is trickling into some sectors.
Beijing has signaled looser monetary policy for 2025 and has doled out a raft of major stimulus measures since late September, in order to boost its sluggish economy.
China’s central bank has indicated that it plans to lower interest rates from the current 1.5% “at an appropriate time” in 2025, the Financial Times reported on Friday.
Traders assess EIA data amid oversupply concerns
{{8849|US crude oil inventories declined, while gasoline and distillate stocks saw significant increases as demand softened during the week ending December 27, the reported on Thursday.
The EIA stated that dropped by 1.2 million barrels last week, falling short of analysts’ expectations for a 2.8 million-barrel decrease.
Latest EIA surveys have shown that U.S. oil production remains near record levels, and the incoming Donald Trump administration is likely to agree to policies that would focus on ramping up domestic fossil fuel production.
This comes amid worries about potential oversupply driven by anticipated production increases from non-OPEC nations, further underscoring an oversupply scenario.
The International Energy Agency recently said that the oil market will remain adequately supplied, despite a rise in demand forecast for 2025.
(Peter Nurse contributed to this article.)
Commodities
Biden to ban new oil drilling over vast areas of US Atlantic, Pacific waters, Bloomberg News reports
(Reuters) – President Joe Biden is set to ban new offshore oil and gas development across 625 million acres (250 million hectares) of U.S. coastal territory, Bloomberg News reported on Friday.
The ban, to be announced on Monday, rules out the sale of drilling rights in stretches of the Atlantic and Pacific oceans and the eastern Gulf of Mexico, said the report, citing unidentified people familiar with the matter.
Biden is leaving the possibility open for new oil and leasing in the central and western areas of the Gulf of Mexico, which account for around 14% of the nation’s production of these fuels, the report said.
The White House did not immediately respond to a Reuters request for comment outside of business hours.
The ban would solidify Biden’s legacy on addressing climate change and his goal to decarbonize the U.S. economy by 2050.
The New York Times (NYSE:) reported that a section of the law Biden’s decision relies on, the Outer Continental Shelf Lands Act, gives a president wide leeway to bar drilling and does not include language that would allow President-elect Donald Trump or other future presidents to revoke the ban.
Biden, Trump and Trump’s predecessor, Barack Obama, all used the law to ban sales of offshore drilling rights in some coastal areas.
Trump tried in 2017 to reverse Arctic and Atlantic Ocean withdrawals Obama had made at the end of his presidency, but a federal judge ruled in 2019 that the law does not give presidents the legal authority to overturn prior bans.
(Reuters) – Russian rescue workers have cleared more than 86,000 metric tons of contaminated sand and earth on either side of the Kerch Strait following an oil spill in the Black Sea last month, the emergencies ministry said on Saturday.
The oil leaked from two ageing tankers that were hit by a storm on Dec. 15. One sank and the other ran aground.
More than 10,000 people have been working to shovel up viscous, foul-smelling fuel oil from sandy beaches in and around Anapa, a popular summer resort. Environmental groups have reported deaths of dolphins, porpoises and sea birds.
The emergencies ministry said on the Telegram messaging app that oil-tainted soil had been collected in the broader Kuban region in Russia and in Crimea, which Moscow annexed from Kyiv in 2014.
The ministry published video footage showing dozens of workers in protective suits loading bags of dirt onto diggers and others skimming dirt off the sand with shovels.
Russia’s transport ministry said this week experts had established that about 2,400 metric tons of oil products had spilled into the sea, a smaller spill than initially feared.
When the disaster struck, state media reported that the stricken tankers, both more than 50-years old, were carrying some 9,200 metric tons (62,000 barrels) of oil products in total.
The spill involved heavy M100-grade fuel oil that solidifies at a temperature of 25 degrees Celsius (77 degrees Fahrenheit) and, unlike other oil products, does not float to the surface but sinks to the bottom or remains suspended in the water column.
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