Commodities
Gold prices inch higher as Syria, S.Korea turmoil supports haven demand
Investing.com– Gold prices rose slightly in Asian trade on Monday as geopolitical turmoil in Syria and South Korea helped spur some safe haven demand, although a strong dollar limited most gains.
The yellow metal was nursing a muted performance in recent weeks, as increased geopolitical tensions were offset by heightened uncertainty over U.S. interest rates, which saw traders largely favor the dollar and Treasuries.
rose 0.2% to $2,638.77 an ounce, while expiring in February steadied at $2,660.41 an ounce by 23:17 ET (04:17 GMT).
Syria, S.Korea turmoil spurs some gold demand
Buying into the yellow metal was fueled largely by increased haven demand, after rebel forces took over Syria’s capital Damascus and ousted President Bashar al-Assad, who fled to Russia.
Markets were waiting to see just what the regime change could entail after a protracted civil war. The rebel forces were partially backed by Turkey and hold ties to the Sunni Islamic sect, putting them at odds with Iran.
Other reports said Israel had also entered Syrian territory.
In South Korea, a leadership crisis deepened over the weekend as prosecutors named President Yoon Suk Yeol in a criminal investigation over a failed attempt to impose martial law last week.
Yoon survived an impeachment vote over the weekend. But the leader of his own party said the president would be sidelined and forced to eventually step down.
The two points of geopolitical turmoil helped spur some safe haven demand for gold.
But gains in the yellow metal were limited by resilience in the dollar, which firmed before key inflation data due this week.
Markets have largely maintained bets that the Federal Reserve will cut interest rates by 25 basis points next week. But the central bank’s long term outlook on rates has turned uncertain, with sticky inflation and economic resilience likely to elicit a slower pace of easing in 2025.
Other precious metals were mostly weak on Monday. steadied at $935.75 an ounce, while fell 0.5% to $31.442 an ounce.
Copper dented by China disinflation
Among industrial metals, copper prices retreated on Monday as softer-than-expected Chinese inflation data heralded more signs of economic strain in top importer China.
Benchmark on the London Metal Exchange fell 0.2% to $9,082.0 a ton, while February fell 0.3% to $4.1858 a pound.
Chinese consumer inflation shrank more than expected in November, while producer inflation shrank for a 25th consecutive month, amid limited signs of improving economic conditions in the county, despite recent stimulus measures from Beijing.
Investing.com — Copper prices are down more than 1% after the Federal Reserve hinted at fewer rate cuts for the upcoming year.
The shift to a more hawkish stance by the Fed has resulted in an increase in bond yields, a surge in the strength of the dollar to 25-month highs, and a spike in volatility. This shift has also led to a sharp decline in key commodity currencies.
Market participants have expressed concern that there isn’t much on the annual calendar to halt this downward trend. The three-month London Metal Exchange (LME) contract has registered a 1.5% decrease, trading at $8,912 a ton.
In addition to the Federal Reserve’s stance, looming U.S. tariffs on Chinese goods and uncertainties surrounding China’s domestic demand outlook continue to pressure the market.
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Investing.com– Gold prices rebounded from a one-month low on Thursday as the Federal Reserve lowered interest rates as expected, although the central bank’s hawkish stance on future rate cuts clouded the outlook for bullion.
Gold prices had dropped more than 2% overnight after the Fed’s policy meeting indicated fewer rate cuts in 2025, as sticky inflation remained a major concern.
jumped as much as 1.3% to $2,618.11, while expiring in February dropped 1.2% to $2,620.79 an ounce by 22:51 ET (03:51 GMT).
Spot gold rebounds, but outlook dim amid slower rate cuts
The Fed reduced by 25 basis points but signaled it will adopt a slower pace for future cuts.
Lower interest rates bode well for gold prices as the opportunity cost of holding gold decreases, making it more attractive compared to interest-bearing assets like bonds.
However, gold futures fell sharply as the rates are expected to remain higher for a longer period after Wednesday’s cut. Markets have ruled out chances of a cut in January and now expect just two more cuts in 2025, against their earlier expectations of four.
Fed Chair Jerome Powell said further reductions depend on progress in curbing persistent inflation, reflecting policymakers’ adjustments to potential economic shifts under the incoming Donald Trump administration.
The Federal Reserve’s hawkish stance was aimed at curbing inflation, but it also signals confidence in the resilience of the U.S. economy. This risk-on sentiment can reduce the demand for safe-haven assets, further dampening bullion’s prospects.
With fewer cuts expected in 2025, the is expected to strengthen further. The greenback surged to an over two-year high on Wednesday.
Additionally, the maintained its interest rates on Thursday, as policymakers remained cautious over Japan’s economic outlook and the path of inflation.
Among other precious metals, rose 0.7% to $928.90 an ounce, while slumped 2.7% to $29.922 an ounce.
Copper falls on as dollar hits 2-yr high
Among industrial metals, copper prices extended declines on Thursday after the Fed’s hawkish stance bolstered the dollar. The red metal took limited support from reports of more fiscal spending in top importer China over the coming year.
The rose 0.1% in Asian trade on Thursday and was at an over two-year high after the Fed meeting.
Benchmark on the London Metal Exchange fell 1.4% to $8,921.50 a ton, while one-month were largely unchanged at $4.089 a pound.
By Colleen Howe, Trixie Yap and Anna Hirtenstein
(Reuters) -Oil prices fell on Thursday after the U.S. Federal Reserve signalled it would slow the pace of interest rate cuts in 2025, which could hurt economic growth, reduce fuel demand and strengthen the dollar.
futures declined by 29 cents to $73.10 a barrel by 1249 GMT. U.S. West Texas Intermediate crude lost 16 cents to $70.42.
The declines gave back Wednesday’s gains on a drop in stocks and the Fed’s expected rate cut of 25 basis points.
Prices weakened after U.S. central bankers issued projections pointing to two quarter-point cuts in 2025 on concern over rising inflation. That was half a point less than they had flagged in September.
“The bottom line for oil is the longer the Fed stays on pause, the stronger the U.S. dollar. This tends to generate headwinds for commodities like oil,” said Harry Tchilinguirian at Onyx Capital Group.
A stronger dollar makes dollar-priced commodities more expensive while higher interest rates weigh on economic growth, potentially reducing demand for oil.
Chinese refining giant Sinopec (OTC:), meanwhile, expects China’s oil consumption to peak by 2027, it said on Thursday.
“The demand-supply balance going into 2025 continues to look unfavourable and predictions of more than 1.0 million bpd demand growth in 2025 look stretched in our opinion. Even if OPEC+ continues to withhold production, the market may still be in surplus,” said Suvro Sarkar, DBS Bank energy sector team leader.
Though demand in the first half of December rose year on year, volumes remained lower than expected by some analysts.
JP Morgan analysts said that global oil demand growth for December so far was 700,000 barrels per day (bpd) less than it had expected, adding that global demand this year has risen by 200,000 bpd less than it had forecast in November 2023.
Official data from the Energy Information Administration on Wednesday showed U.S. crude stocks fell by 934,000 barrels in the week to Dec. 13. Analysts polled by Reuters had expected a drawdown of 1.6 million barrels. [EIA/S]
While the decline was less than expected, the market found support from last week’s rise in U.S. crude exports by 1.8 million bpd to 4.89 million bpd.
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