Gold edges down on rate hike views after strong US jobs data
Gold prices inched down on Monday after robust US jobs data late last week potentially increased the chances of more US interest rate hikes this year. Spot gold had dipped 0.2 per cent to $1,330.60 per ounce
Spot gold had on Friday declined 1.2 per cent, its biggest one-day fall since December 7. Last week, the metal saw its largest weekly decline since the week-ending December 8. US gold futures were down 0.3 per cent at $1,333.30 per ounce.
Non-farm payrolls rose by 200,000 jobs in January, the US Labour Department said, beating expectations of 180,000 and their largest annual gain in more than 8-1/2 years. Average hourly earnings rose and boosted the year-on-year increase to 2.9 per cent, the largest rise since June 2009.
“We have a bearish outlook for gold … and yield-chasing behaviour and a rosy economic outlook should pressure the yellow metal lower,” said OCBC analyst Barnabas Gan. “The higher interest rate environment will actually fuel further risk-taking and is not good for gold.”
Futures markets had reacted on Friday after the jobs data by pricing in the risk of three, or even more, rate rises from the US Federal Reserve this year. The Fed had last week held interest rates unchanged, but raised its inflation outlook and flagged “further gradual” rate increases.
Higher interest rates make gold less attractive to investors because it does not pay interest.
Asian share markets stumbled on Monday as fears of resurgent inflation battered bonds, toppled Wall Street from record highs and sparked speculation central banks globally might be forced to tighten more aggressively.
“The fall in stocks has just started and it could just be a short-term correction before running higher. We should not read too much in to the fall in stocks and relate it to gold,” Gan said.
Meanwhile, hedge funds and money managers raised their net long position in COMEX gold contracts in the week to January 30 to their highest level since late-September, US Commodity Futures Trading Commission (CFTC) data showed on Friday.
Spot silver climbed 0.6 per cent to $16.69. Earlier, it touched $16.54, matching more than one-month lows hit on Friday. Silver fell 3.7 per cent on Friday to its worst one-day decline since December 15, 2016. It also saw its worst week since week-ending July 7, falling 4.6 per cent last week.
Platinum rose 0.2 per cent to $987.95, after touching more than two week low at $982 on Friday. Palladium fell 0.5 per cent to $1,041.50.
London nickel steadies above week lows, at risk of further losses
(Reuters) – London nickel climbed on Monday after posting its largest daily loss in two months in the session before, but prices were seen tailing off ahead of the Lunar New Year next week.
“Aside from the strengthening dollar, we think concerns about China’s weak demand (have) also weighed on the nickel price,” said broker Argonaut Securities in a report.
Some of China’s stainless steel mills, the major consumers of nickel, are losing money at current prices and have already wound down their operations, it said.
“Looking into February, a week long Chinese Lunar New Year will further dampen production and demand. More steel plants are expected to arrange care and maintenance therefore production of stainless steel is expected to contract further,” it said.
“We expect to see price weakness in nickel going forward.”
* NICKEL: London Metal Exchange Nickel cut early losses to trade up 0.4 percent, paring Friday’s 4 percent plunge that was also fanned by expectations of a glut due to growing nickel ore exports from Indonesia. Shfe nickel was down 2 pct.
* COPPER: LME copper firmed by 0.7 percent amid a flat-to-lower complex. It traded at $7,090 a tonne by 0727 GMT.Prices dropped 1 percent on Friday when they hit the highest ina week at $7,188.50 before falling into the close. On the Shanghai Futures Exchange where prices have trended lower since late December, copper stayed down by 0.3percent at 53040 yuan ($8,425) a tonne.
* US ECONOMY: U.S. job growth surged in January and wages increased further, recording their largest annual gain in more than 8-1/2 years, bolstering expectations that inflation will push higher this year as the labour market hits full employment.
* PERU PRODUCTION: Higher supply overhung the market after Peru, the world’s No. 2 copper and zinc producer, reported a substantial rise in production. Copper production grew 3.9percent to 2.4 million tonnes and zinc production surged by 10.2percent to 1.5 million tonnes.
* LEAD: Lead prices took a breather from a 6-1/2-year top of $2,685 from Friday to tail back by 0.7percent.
* ALUMINIUM: Russian aluminium maker Rusal said onestimated that China’s winter capacity cuts will curb output by1 million tonnes annually.
* INVESTORS: Hedge funds and money managers cut their netlong position in COMEX copper in the week to Jan. 30, U.S.Commodity Futures Trading Commission (CFTC) data showed.
* MARKETS: Asian share markets stumbled on Monday as fearsof resurgent inflation battered bonds, toppled Wall Street fromrecord highs and sparked speculation central banks globallymight be forced to tighten more aggressively.
Oil Struggles to Persist With Bull Run as U.S. Drilling Expands
By Sharon Cho
Short-sellers boost positions on WTI for a third week
WTI declines to trade near $65 after dropping last week
Oil’s rally is unraveling on fears over a rise in U.S. production after crude’s best January in more than a decade.
Futures in New York are extending declines for a second session as Baker Hughes data showed American explorers last week raised the number of rigs drilling for crude to the highest in almost six months. Short-sellers betting against West Texas Intermediate oil increased their positions for a third week, according to figures from the U.S. Commodity Futures Trading Commission.
Crude has remained above $60 a barrel this year, extending a rally driven by the extension of an output deal until the end of 2018 by the Organization of Petroleum Exporting Countries and its allies. While oil’s best start to the year since 2006 was also helped by falling U.S. inventories and a weaker greenback, Citigroup Inc. says the market is underestimating U.S. output growth as a bigger surge is forecast along with an increase capital spending.
“With the higher U.S. oil rig counts and higher oil production sustaining into February, the concerns in the market seem to be valid at this point,” Barnabas Gan, an economist at Oversea-Chinese Banking Corp., said by phone from Singapore. “As these worries resurface, prices are edging lower.”
WTI for March delivery dropped as much as 83 cents to $64.62 a barrel on the New York Mercantile Exchange and traded at $64.92 at 7:53 a.m. in London. The U.S. benchmark declined 35 cents to $65.45 on Friday. Total volume traded was about 51 percent above the 100-day average.
Brent for April settlement lost as much as 89 cents to $67.69 a barrel on the London-based ICE Futures Europe exchange. Prices dropped 2.8 percent last week. The global benchmark crude traded at a premium of $3.50 to April WTI, the least since August.
U.S. drillers last week added 6 rigs to raise the number of machines drilling for crude to 765, the highest since Aug. 11, Baker Hughes data showed Friday. That may lead to a further increase in U.S. crude production, which breached 10 million barrels a day to the highest level in more than four decades in November.
Short-sellers against WTI futures made an appearance for a third week, casting doubts over oil’s more than 50 percent rally since June. Short positions increased 6.3 percent to 39,127 contracts in the week ended Jan. 30, rising the most in eight weeks, according to CFTC data.
* Iran can swiftly boost oil production if OPEC decides to scrap limits on global output when the group meets next in June, Oil Minister Bijan Namdar Zanganeh said Sunday.
* Saudi Arabia kept pricing for its main crude grade to Asia unchanged for a second month as the world’s largest crude exporter responds to slower seasonal demand versus earlier expectation for a small decrease in a Bloomberg survey.
* Gasoline futures fell 0.4 percent, extending their decline to $1.8637 a gallon, after dropping to the lowest level in two weeks in the previous session.
* The S&P 500 Energy Index slumped more than 6 percent last week after Exxon Mobil Corp. and Chevron Corp., the two largest U.S. oil explorers, both missed Wall Street’s profit and output forecasts, spurring a stock selloff among investors.
— With assistance by Perry Williams