Commodities
Gold prices weaken, spot slips below $1,900 as rate hike fears persist
© Reuters.
Investing.com– Gold prices fell below key levels on Wednesday, extending a recent slump as persistent fears of rising interest rates, following hawkish signals from the Federal Reserve, saw investors largely favor the dollar.
The scaled 10-month highs this week, having largely overtaken gold as a preferred safe haven this year as interest rates rose. With the Fed now signaling one more rate hike in 2023 and fewer rate cuts next year, this trend is set to continue.
Surging Treasury yields also pressured gold’s appeal, with the hitting a 16-year high this week.
– which represents real-time trade in physical bullion, sank 0.2% to $1,897.49 an ounce, falling below the $1,900 level for the first time in a month.
expiring in December fell 0.2% to $1,914.95 an ounce, and were also trading at one-month lows by 00:31 ET (04:31 GMT). Both instruments extended losses into a third straight session.
Rising interest rates push up the opportunity cost of investing in gold and other non-yielding assets. This trade had battered the yellow metal through the past year.
Any scope for a recovery in gold is also clouded by the prospect of U.S. rates remaining higher for longer.
Gold sees little safe haven demand even as govt shutdown looms
The yellow metal saw few safe haven flows even as markets grew more concerned over a U.S. government shutdown. Congress has until the end of September to pass a spending bill, although policymakers showed little signs of reaching consensus on a broader spending bill.
Analysts warned that a shutdown in 2023 could have greater ramifications for the U.S. economy, especially as it grapples with high interest rates and sticky inflation.
But that notion appeared to have driven few inflows into gold, given that past shutdowns had a limited impact on risk-driven assets, particularly stocks.
Copper weakens despite positive Chinese data, property jitters deepen
Among industrial metals, copper prices fell on Wednesday even as data showed that China’s rebounded in August after a nearly year-long slump.
fell 0.2% to $3.6402 a pound, and were close to a one-month low.
Optimism over the Chinese data was largely offset by worsening fears of a property market crisis.
Media reports said that the chairman of beleaguered developer China Evergrande Group (HK:) had been placed under police surveillance, just a few days after it suspended its debt restructuring plan over an investigation into its unit Hengda Real Estate.
Evergrande is the world’s most indebted property developer, and is at the heart of a deepening debt crisis in China, which has dented economic growth over the past three years.
China’s property market is key source of copper demand, with concerns over the sector having battered copper prices through the past year.
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.
(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]
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.
Forex2 years agoForex Today: the dollar is gaining strength amid gloomy sentiment at the start of the Fed’s week
- Forex2 years ago
How is the Australian dollar doing today?
- Forex2 years ago
Dollar to pound sterling exchange rate today: Pound plummeted to its lowest since 1985
- Forex2 years ago
Unbiased review of Pocket Option broker
- Cryptocurrency2 years ago
What happened in the crypto market – current events today
- World2 years ago
Why are modern video games an art form?
- Stock Markets2 years ago
Morgan Stanley: bear market rally to continue
- Commodities2 years ago
Copper continues to fall in price on expectations of lower demand in China
