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Commodities

Gold prices weaken, spot slips below $1,900 as rate hike fears persist

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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.

Commodities

Oil falls as China stimulus fails to boost sentiment, US dollar strength

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By Arunima Kumar

(Reuters) – Oil prices fell on Monday (NASDAQ:), after China’s stimulus plan disappointed investors seeking fuel demand growth in the world’s No. 2 oil consumer and as the U.S. dollar edged higher.

futures fell $1.10, or 1.5% to $72.77 a barrel by 1101 GMT while U.S. West Texas Intermediate crude futures were at $69.17 a barrel, down $1.21, or 1.7%.

Both benchmarks fell more than 2% on Friday.

The dollar firmed 0.40%, as traders prepared for a key reading of U.S. consumer inflation this week, as well as a parade of Federal Reserve speakers, including Chair Jerome Powell on Thursday.

A stronger dollar makes greenback-denominated commodities such as oil more expensive for holders of other currencies and tends to weigh on prices.

In China, consumer prices rose at the slowest pace in four months in October while producer price deflation deepened, data showed on Saturday, even as Beijing doubled down on stimulus to support the sputtering economy.

“Chinese inflation figures were again weak, with the market fearing deflation, particularly as the yearly change in the producer price index fell further into negative territory…, Chinese economic momentum remains negative,” said Achilleas Georgolopoulos, market analyst at brokerage XM.

The latest support measures will not revive China’s oil demand growth or imports, said Tamas Varga, analyst at oil broker PVM.

“After last week’s U.S. presidential election attention is slowly drifting back to the underlying fundamentals,” Varga said.

Oil prices also eased after concerns about potential supply disruptions from storm Rafael in the U.S. Gulf of Mexico subsided.

More than a quarter of U.S. Gulf of Mexico oil and 16% of output remained offline on Sunday, according to the offshore energy regulator.

Looking ahead, there were also concerns that U.S. oil and gas output could rise under the new Trump administration although analysts say 2025’s production forecast is unlikely to change.

© Reuters. FILE PHOTO: A pumpjack operates at the Vermilion Energy site in Trigueres, France, June 14, 2024. REUTERS/Benoit Tessier/File Photo

“We think producers may think twice about turbo-charging U.S. supply in an era when OPEC+ has already staked out plans to gradually raise production targets over the course of 2025,” Tim Evans of Evans Energy said in a note.

Trump’s election promise of hiking import tariffs to boost the U.S. economy has clouded the global economic outlook although expectations that he could tighten sanctions on OPEC producers Iran and Venezuela and cut oil supply to global markets partly caused oil prices to gain more than 1% last week.

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Commodities

Oil prices plunge as China stimulus underwhelms, US hurricane risk abates

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Investing.com– Oil prices fell Monday as more fiscal stimulus measures from top importer China underwhelmed, while a hurricane in the Gulf of Mexico appeared to have a limited impact on U.S. production.

At 07:45 ET (12:45 GMT),  fell 1.8% to $72.56 a barrel, while dropped 2% to $69.00 a barrel. 

China stimulus underwhelms 

Prices extended losses from Friday after Beijing approved about 10 trillion yuan ($1.4 trillion) in measures aimed at lowering government debt levels. But a lack of targeted measures for private consumption largely left investors wanting more, especially as data over the weekend showed persistent Chinese deflation.

China’s new stimulus measures disappointed investors hoping for more, especially as the world’s biggest oil importer did not announce measures specifically aimed at improving private spending. 

Analysts at ANZ said the gaps in stimulus were to accommodate for potential headwinds from a change in U.S. administration, after Donald Trump won the 2024 presidential elections.

Trump has vowed to impose steep import tariffs against China, heralding more economic headwinds for the country. 

Data released over the weekend also showed Chinese consumer inflation contracted in October, while producer inflation shrank for a 25th consecutive month.

“Markets were left underwhelmed by China’s debt package, which will help alleviate local government debt and allow them to implement more stimulus measures. In addition, a Trump presidency is seen as relatively more bearish for energy markets. However, the key risk to this view is if President Trump chooses to strictly enforce sanctions against Iran. This would erase the surplus expected over 2025,” said analysts at ING, in a note.

US supply fears abate as Hurricane Rafael weakens 

Hurricane Rafael weakened into a tropical storm over the Gulf of Mexico, and is expected to weaken further in the coming days.

The storm is now projected to pose a limited threat to oil production in the region, heralding fewer supply disruptions.

Chevron (NYSE:) stated on Sunday that has started redeploying personnel and restoring production at its Gulf Of Mexico platforms that were closed for Hurricane Rafael.

Chevron operates six platforms in the Gulf of Mexico – Anchor, Blind Faith, Jack/St. Malo, Tahiti, Petronius, and Big Foot.

Speculators increased crude longs 

The latest positioning data shows that speculators increased their net long positions in ICE in the lead-up to the US election.

Speculators bought 32,238 lots over the last reporting week to leave them with a net long of 126,145 lots as of last Tuesday. Similarly, speculators increased their net long in NYMEX WTI by 48,143 lots to 143,985 lots.

“Softer fundamentals through next year suggest little reason for speculators to jump into the market. However, there are clear risks, including OPEC+ deciding to further delay the unwinding of their supply cuts next year,” ING added.

(Ambar Warrick contributed to this article.)

 

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Commodities

Labor dispute stops Canadian canola oil, forestry exports from West Coast

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By Ed White

(Reuters) – Canada’s exports of canola oil and forest products from West Coast ports have halted due to a labor dispute, producers said on Thursday.

The stoppage, which started on Monday (NASDAQ:), involves limited strike action by the longshore foremen and a full lockout of Local 514 of the International Longshore and Warehouse Union by the B.C. Maritime Employers Association.

While bulk grain shipments are exempt from the British Columbia action, canola oil and forestry products are not covered by that federal labor code provision and are not being loaded onto ships at Pacific ports.

Based on the market price of canola oil, each day without shipments represents C$4 million in lost revenue, said Chris Vervaet, the executive director of the Canadian Oilseed Processors Association, which says it represents about 95% of Canada’s canola and soybean crush capacity.

“We really implore the government to get involved and really help both sides to a resolution.”

Federal Labor Minister Steven MacKinnon has said both sides have a responsibility to reach an agreement. On Thursday he criticized the lack of apparent progress between the union and employers as well as a smaller shutdown affecting some container traffic at the Port of Montreal.

“Both sets of talks are progressing at an insufficient pace, indicating a concerning absence of urgency from the parties involved,” said MacKinnon in a post on social media platform X.

Vervaet said Canada exports about one million metric tons of canola oil through the Port of Vancouver yearly.

Canada is the world’s top exporter of the oilseed, and canola oil is the most valuable part of the crop.

© Reuters. International Longshore and Warehouse Union Local 514 members and supporters march to the Port of Vancouver amid a labour dispute, in Vancouver, British Columbia, Canada November 8, 2024. REUTERS/Jennifer Gauthier

The Forest Products Association of Canada also called for federal government intervention.

Wood, pulp, paper and byproduct shipments by the organization’s members make up about 17% of Vancouver’s container exports and 14% of Montreal’s.

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