Commodities
Gold prices steady with US labor data, rate cut bets in focus
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© Reuters.
Investing.com– Gold prices moved little in Asian trade on Thursday as traders hunkered down in anticipation of more cues on a cooling U.S. labor market, while focus also remained on when the Federal Reserve planned to begin trimming interest rates.
The yellow metal appeared to have settled into a trading range of between $2,020 and $2,050 an ounce after briefly surging to record highs above $2,100 at the beginning of the week.
A string of different factors had spurred gold’s rally, as seemingly dovish cues from Fed Chair Jerome Powell pushed up expectations that the Fed will cut rates by as soon as March 2024.
But markets tapered these expectations over the week, especially amid some signs of resilience in the U.S. economy.
Increased safe haven demand, following an attack on U.S. vessels in the Red Sea, also aided gold prices, although a lack of any escalation in the Middle East saw tensions ebb out of markets.
steadied at $2,026.30 an ounce, while expiring in February fell 0.2% to $2,043.05 an ounce by 00:24 ET (05:24 GMT).
Nonfarm payrolls in focus as markets speculate over Fed cuts
Traders were now focused squarely on data for November, due on Friday, for any more cues on the labor market.
and data released earlier this week signaled some cooling in the U.S. labor market. But markets were awaiting definitive signals from the nonfarm payrolls reading.
The reading is also due amid growing uncertainty over the timing of the Fed’s interest rate cuts. While the central bank is widely expected to , markets were uncertain over when it could begin loosening policy.
So far, Fed officials have shown little inclination to begin cutting interest rates, with Powell having recently reiterated his higher-for-longer stance. But traders are betting that a further cooling in inflation and the labor market will see the Fed change its tone in the coming months.
Gold is expected to benefit from any signals of a less hawkish Fed and a cooling labor market. The yellow metal has comfortably held the $2,000 level since late-November, which could herald more strength in the coming weeks.
Copper rebounds on positive China import data
Among industrial metals, copper prices rose sharply on Thursday, rebounding from three straight days of losses as data showed Chinese imports of the red metal surged to a two-year high.
expiring in March rose 0.7% to $3.7568 a pound.
China’s copper imports jumped 10.1% in November to 550,566 metric tons- their highest since December 2021. The data indicated that Chinese copper demand remained robust, even as other aspects of the economy slowed.
China’s overall unexpectedly shrank in November, while grew for the first time in six months.
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Commodities
Oil prices settle lower after weak August jobs report adds to demand concerns
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Investing.com — Oil prices settled lower Friday, ending the week with a loss as weaker U.S. nonfarm payrolls stoked concerns about an economic-led slowdown in crude demand.
At 2:30 p.m. ET (1430 GMT), the futures (WTI) traded fell 2.1% to settle at $67.67 a barrel, while contract fell 2.2% to $71.06 per barrel.
U.S. economic slowdown worries resurface after weak jobs report
The US economy added fewer jobs than anticipated in August, but rose from a sharply revised July figure, according to Labor Department data that could factor into the Federal Reserve’s next policy decisions.
Nonfarm payrolls came in at 142,000 last month, up from a downwardly-revised mark of 89,000 in July. Economists had called for a reading of 164,000, up from the initial July mark of 114,000.
Following the release, bets that the Fed will introduce a deeper 50 basis-point rate cut — rather than a shallower 25 basis-point reduction — increased.
Concerns about the demand come just a day after OPEC+ said it had agreed to postpone a planned increase in oil production for October and November.
U.S., Europe working on Iran sanctions
Geopolitical tensions ratcheted up on Friday after the U.S. and Europe they were working on sanctions to impose on Iran after the Tehran sent missiles to Russia.
The U.S. had previously warned Iran about transferring missiles to Russia, saying it would represent a major escalation in Iran’s support of Russia’s war against Ukraine.
Commodities
Goldman Sachs expects OPEC+ production increases to start in December
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(Reuters) – Goldman Sachs adjusted its expectations for OPEC+ oil production saying it now expects three months of production increases starting from December instead of October, the bank said in a note on Friday.
OPEC+ has agreed to delay a planned oil output increase for October and November, the producers group said on Thursday after crude prices hit their lowest in nine months, adding it could further pause or reverse the hikes if needed.
However Goldman Sachs maintained its range of $70-85 per barrel and a December 2025 Brent forecast at $74 per barrel.
The investment bank expects the effects of a modest reduction in OPEC+ supply in the upcoming months to be counterbalanced by easing effects from the current softness in China’s demand and faster-than-expected recovery of Libya’s supply.
“We still see the risks to our $70-85 range as skewed to the downside given high spare capacity, and downside risks to demand from weakness in China and potential trade tensions,” Goldman Sachs said.
Brent crude futures were down $1.63, or 2.24%, to $71.06 a barrel on Friday, their lowest level since December 2021. U.S. West Texas Intermediate crude futures fell $1.48 on Friday, or 2.14%, to $67.67, their lowest since June 2023. [O/R]
Commodities
Citi, Bank of America see oil prices potentially going to $60
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Investing.com — Strategists at Citi Research said oil prices could decline to around $60 per barrel by 2025, citing a significant market surplus as the primary driver.
While recent supply disruptions in Libya and a delayed production cut unwinding by OPEC+ have offered short-term support for Brent prices in the $70-72 range, Citi views this as temporary.
“At the time of writing, markets have not reacted to the OPEC+ decision, with Brent around flat to the 4 September close. Still, the Libyan situation could take months rather than a week to resolve, strategists wrote.
They highlight the likelihood of a strong market surplus emerging next year, pushing prices lower.
“We recommend selling on a bounce toward ~$80 Brent, as we look ahead to moves down to the $60 range in 2025 as a sizeable market surplus emerges,” the note states.
OPEC+ has delayed the start of its planned production cut unwind from October 2024 to December 2024, with the process now set to conclude by the end of 2025. This decision comes in response to recent market weakness and price declines, despite ongoing disruptions to Libyan oil supplies and broader economic concerns in the U.S. and China.
Separately, Bank of America’s Commodities Research team has revised down its price forecast to $75 per barrel for the second half of 2024, down from nearly $90, and for 2025, reduced from $80.
The team cites concerns about growing global oil inventories despite assuming OPEC+ will delay planned production increases. They note that weaker demand growth, combined with record OPEC+ spare capacity exceeding 5 million barrels per day, has dimmed the outlook for oil prices.
“In effect, we now see Brent oil prices moving from the top toward the middle of our unchanged $60-80/bbl medium-term range faster than previously warned,” BofA strategists said. This surplus in capacity, along with slower demand, also reduces the risk of price spikes from potential geopolitical disruptions.
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