Gold steady ahead of central bank speeches at Jackson Hole
By Apeksha Nair
BENGALURU (Reuters) – Gold was unchanged early Friday, with investors awaiting directional clues from speeches due later in the day at a gathering of central bankers in the United States.
Spot gold was unchanged at $1,286.48 an ounce by 0343 GMT, after dropping nearly 0.3 percent in the previous session.
U.S. gold futures for December delivery were flat at $1,291.40 per ounce.
“Gold markets are basically in a holding pattern. They would be carefully scrutinising comments from the Federal Reserve and European Central Bank officials as to the their outlook for inflation, and resultant monetary policy stance,” John Sharma, Economist at National Australia Bank said.
Fed Chair Janet Yellen and ECB President Mario Draghi are set to speak later in the day at the central bankers symposium in Jackson Hole, Wyoming.
Although no new policy messages are expected from either, investors will be watching for clues on outlook for monetary policy and interest rates.
The world’s top central bankers will meet with their confidence bolstered by a sustained return to economic growth that may eventually allow the European Central Bank and the Bank of Japan to follow the Federal Reserve in winding down their crisis-era policies.
Bullion is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
The dollar was buoyant against the yen on Friday as some participants bought back the currency to square positions ahead of the Jackson Hole meeting.
Preventing gold prices from retreating significantly were escalating geopolitical concerns, market participants said.
“Political uncertainty remains high and continues to provide a strong level of support to prices. Trump’s barrage of tweets during negotiations over the debt ceiling continues to fuel a level of uncertainty in the market,” ANZ analyst Daniel Hynes said in a note.
President Donald Trump on Thursday picked a new fight with his fellow Republicans, saying congressional leaders could have avoided a “mess” over raising the U.S. debt ceiling if they had taken his advice.
Gold is used as an alternative investment during times of political and financial uncertainty.
Spot gold looks neutral in a range of $1,282-$1,289 per ounce, and an escape could suggest a direction, Reuters technical analyst Wang Tao said.
Meanwhile, top consumer China’s net gold imports via main conduit Hong Kong increased 2.3 percent in July from the previous month, data showed on Thursday.
Among other precious metals, silver edged up 0.2 percent at $16.96 an ounce, while platinum fell 0.6 percent to $972.50 an ounce.
Palladium was up 0.1 pct to $932.70 per ounce.
(Reporting by Apeksha Nair in Bengaluru; Editing by Richard Pullin and Sunil Nair)
Best Run in 11 Years Beckons for Metals as China Drives Rally
Nation’s supply-side reforms, pollution curbs aiding prices
Copper, aluminum, zinc all up more than 20 percent this year
Industrial metals including copper and aluminum are heading for the longest run of weekly gains in more than a decade on investor optimism driven by China, with demand holding up in the largest user just as policy makers press on with reforms that should curb supply.
The LME Index climbed 2.4 percent in the four days since Monday, and if the advance sticks, the gauge will cap a seventh weekly increase. That would be the longest rally since a nine-week run in 2006, before the global financial crisis from which industrial commodities have since struggled to fully recover.
There’s increasing speculation that China’s measures to cut capacity and sharpen environmental controls will tighten markets that are still benefiting from healthy demand. Citigroup Inc. this week boosted its outlook for a sweep of metals, saying markets had been surprised by China’s tough execution of the reforms. Antofagasta Plc told Bloomberg TV that the Chilean copper producer doesn’t see any reason why the good times won’t continue.
“The gains appear to be largely driven by cutbacks in Chinese production, particularly in things like aluminum, and the rest of the market is sort of adjusting to that,” Ric Spooner, chief market analyst at CMC Markets Asia Pacific Pty, said by phone from Sydney. “Demand levels are continuing at a steady rate, but Chinese authorities are going to have to tread the path between continued growth, and healthy balance sheets.”
Among the standouts this week:
* Copper hit $6,731.50 a metric ton on the London Metal Exchange, the highest price since November 2014. The metal’s on course for a seventh straight weekly rise, and traded at $6,714.5 at 12:00 p.m. in Shanghai
* Aluminum rose to $2,122.50 a ton, the most expensive since February 2013, and it’s the top gainer among the six main metals this year with a 24 percent climb. It was last at $2,100 a ton
* Zinc spiked to a decade-high of $3,231.75 a ton, while nickel rallied to $11,825 a ton, the highest since November
— With assistance by Martin Ritchie
Copper up as China outlook brightens, stocks fall
(Reuters) – Copper was trading close to its highest in nearly three years on Friday, tracking a firmer London session on the back of robust demand signs in China and falling stockpiles.
Investors are focused on fundamentals in commodities markets, pushing industrial commodities, such as copper, higher, according to ANZ bank
* LME COPPER: Three-month copper on the London Metal Exchange was up 0.3 percent at $6,708 a tonne by 0100 GMT, close to Thursday’s peak of $6,731.50, the highest since November 2014.
* SHFE COPPER: The most-traded copper contract on the Shanghai Futures Exchange was up 1.5 percent to 52,530 yuan ($7,887.39)a tonne.
* SHFE ALUMINIUM: China aluminium futures were slightly firmer at 16,570 yuan, the highest in more than five years.
* LME: Aluminium – up 25 percent since January – was flat at $2,109. Aluminium is finding fundamental support on expectations of a decline in supply as China braces for capacity shutdowns at its smelters over the winter months. The “tom-next” spread for aluminium, which is the cost of borrowing metal for a day and often a flashpoint for positioning tension, has flared to $10 backwardation.
* RUSAL: Russian aluminium giant Rusal reported a 48 percent rise in second-quarter core earnings on Friday due to a higher aluminium price, and pointed to a positive outlook for the second half as supply in China tightens.
* U.S. STEEL: American steel industry executives have appealed directly to President Donald Trump for immediate import restrictions in a letter seen by Reuters, as a U.S. Commerce Department national security probe languishes and steel imports surge back to 2015 levels.
Oil prices rise as Hurricane Harvey heads for US Gulf coast
SINGAPORE (Reuters) – Oil prices rose on Friday as the U.S. petroleum industry prepared for potential output disruptions as Hurricane Harvey headed for the heart of the nation’s oil industry in the Gulf of Mexico.
The storm has rapidly intensified since Thursday, spinning into potentially the biggest hurricane to hit the U.S. mainland in 12 years and taking aim between Houston and Corpus Christi on the coast of Texas.
U.S. West Texas Intermediate (WTI) crude futures were at $47.76 a barrel at 0534 GMT, up 33 cents, or 0.7 percent, from their last settlement.
International Brent crude futures were at $52.42 per barrel, up 38 cents, or 0.7 percent, from their last close.
Prices rose as production in the affected area shut down in preparation for the hurricane, and on expectations that closures could last if the storm causes extensive damage.
“Damage and flooding to refineries and shale fields, disrupted production in the Gulf of Mexico and infrastructure damage are unlikely to be bearish for WTI,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA.
U.S. gasoline prices RBc1 have shot up by almost 10 percent since Wednesday to $1.73 per gallon, their highest level since April as refiners also shut down in preparation to the storm.
The Port of Corpus Christi, Texas, was closed to vessel traffic, a spokeswoman for the city’s Port Authority said on Thursday. Oil refineries in the city operated by Citgo Petroleum, Valero Energy Corp and Flint Hills Resources also began shutting down ahead of the storm.
Beyond the storm’s potential impact on the oil industry, crude remains in ample supply globally despite efforts led by the Organization of the Petroleum Exporting Countries (OPEC) to hold back production in order to prop up prices.
OPEC, together with non-OPEC producers including Russia, has pledged to cut output by around 1.8 million barrels per day (bpd) this year and during the first quarter of 2018.
However, not all producers have lived up to their pledges and supplies remain high, resulting in the ongoing low prices.
A joint OPEC, non-OPEC monitoring ministerial committee said on Thursday that an extension to the supply-cut pact beyond March was possible, though not yet decided.
Part of the reason for the crude glut has been rising U.S. production, which has jumped by 13 percent since mid-2016 to 9.53 million bpd, close to its 9.61 million bpd record from June 2015.
Because of soaring U.S. output, the discount of WTI crude to Brent on Friday rose to its widest in almost two years at 4.69 per barrel.
Deeply discounted WTI makes U.S. crude exports attractive, and Thomson Reuters Eikon data shows shipments to Asia hit a record of over 300,000 bpd during the first half of the year.