Gold gains as fear of trade war hits dollar
Bengaluru — Gold prices rose on Monday as the dollar remained subdued on fear of a global trade war.
Uncertainty over the outcome of elections in Italy, which could spell new concerns for the eurozone, gave further support to the metal.
Spot gold was up 0.3% at $1,326.41 an ounce at 4.14am GMT. Earlier in the session, it hit $1,327.03, its highest since February 27. US gold futures climbed 0.3% to $1,327.70/oz.
The dollar index, which measures the greenback against a basket of major currencies, was mostly unchanged at 89.971, after falling against most currencies on Friday.
The US currency slipped from the six-week high it touched on March 1, after US President Donald Trump announced plans to levy hefty tariffs on aluminium and steel imports — igniting fear of a trade war if its trade partners retaliate.
“Any escalation of trade wars will significantly dent the dollar appeal, weigh negatively on US assets such as bond and equities, and make gold the go-to hedge against rising US fiscal and political vulnerabilities,” Oanda Asia-Pacific trading head Stephen Innes said in a note.
A weaker dollar supports gold as it makes it cheaper for holders of other currencies to buy the metal.
“I think gold prices are up partly because of the uncertainty over the impact of the Italian election on the eurozone,” said Ji Ming, chief analyst, Shandong Gold Group.
Italian voters delivered a hung parliament on Sunday and, if early projections are confirmed, none of Italy’s three main groups will be able to rule alone. That leaves little prospect of a return to mainstream, moderate government, giving the European Union a new headache to deal with.
Investor appetite for a safe-haven asset such as gold rises during times of geopolitical and financial uncertainty.
Reuters technical analyst Wang Tao says spot gold could rise to $1,332/oz, as it has pierced above a resistance at $1,325.
In other precious metals, silver rose 0.6% to $16.58/oz.
Platinum inched 0.6% higher to $965.49/oz and palladium gained 0.3% to $994.50/oz.
UK PM May tells U.S. President Trump of “deep concern” over metals tariffs
(Reuters) – British Prime Minister Theresa May told U.S. President Donald Trump she had“deep concern” about the expected announcement of U.S. tariffs on aluminium and steel, May’s office said on Sunday following a phone call between the two leaders.
“The Prime Minister raised our deep concern at the President’s forthcoming announcement on steel and aluminium tariffs, noting that multilateral action was the only way to resolve the problem of global overcapacity in all parties’ interests,” a spokeswoman from May’s office said.
(Reporting by William James Editing by Alexander Smith)
London copper holds above 2-week low on China optimism
(Reuters) – London copper turned flat on Monday as upbeat comments on China’s economy at the annual opening to parliament underpinned prices, while aluminum and metals used in steel dropped on concerns over proposed U.S. trade tariffs.
“We think base metals, in the absence of an escalating trade war, is likely to remain range-bound in March, with a slight downside bias,” said analyst Ed Meir of INTL FC Stone. “The complex should start to strengthen late in Q2, when the impact of higher seasonal demand starts to get felt.”
* COPPER: London Metal Exchange copper traded flat at $6,895 a tonne by 0719 GMT, following losses of 0.4 percent in the previous session. Prices are expected to recover as manufacturing demand cranks up into the seasonally strongest second quarter. Prices hit $6,858.50 on Thursday, their weakest since Feb 13.
* SHFE COPPER: Shanghai Futures Exchange copper eased 0.5 percent to 51950 yuan ($8,204) a tonne on Monday.
* US TRADE TARIFFS: Ministers from the United States, Canada and Mexico meet on Monday to wrap up the latest round of NAFTA talks under the shadow of U.S. President Donald Trump’s proposed steep tariffs on steel and aluminum imports.
* SHFE: Metals that could be hit by the U.S. trade tariffs slumped. Shfe aluminum and nickel slid around 1 percent, while and zinc dropped 2 percent. On the LME, aluminum and zinc fell half a percent and nickel dropped 0.8 percent.
* CHINA ECONOMY: China aims to expand its economy by around 6.5 percent this year, the same as in 2017, while pressing ahead with its campaign to reduce risks in the financial system, Premier Li Keqiang said Monday.
* ALUMINIUM: Some Chinese aluminum producers that shut smelters during a winter crackdown on pollution may not reopen this spring once output curbs are lifted, as planned new capacity by state-run companies threatens to overwhelm demand and cut into profits.
* CURVE: LME aluminum spreads showed easing in supply tightness mid-year when more China production is expected to come online, though nearby spreads from cash to March signaled severe supply stress.
* COPPER: Hedge funds and money managers cut their net long positions in COMEX gold and copper contracts in the week to Feb. 27, U.S. Commodity Futures Trading Commission data showed on Friday.
* DRC: Democratic Republic of Congo President Joseph Kabila will meet mining company representatives on Tuesday to discuss a mining code revision awaiting his signature that would raise taxes and royalties, the mines minister said.
Oil prices climb ahead of OPEC meeting with US shale firms
SEOUL (Reuters) – Oil prices rose on Monday ahead of a meeting between OPEC and U.S. shale firms in Houston, raising expectations that oil producers would discuss further how to clear a global oil glut.
International benchmark Brent crude was up 19 cents, or 0.3 percent, at $64.56 a barrel by 0752 GMT.
U.S. West Texas Intermediate (WTI) crude rose 17 cents, or 0.28 percent, to $61.42 per barrel.
Oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) and other global oil players are set to gather in Houston as CERAWeek, the largest energy industry conference, begins on Monday.
OPEC Secretary General Mohammad Barkindo and other OPEC officials are expected to hold a dinner on Monday with U.S. shale firms on the sidelines of the conference.
“OPEC and Non-OPEC alliance remain at record high compliance, but with Russia continually pressuring for an exit strategy, OPEC will look to offer an olive branch to U.S. shale,” said Stephen Innes, head of trading for the Asia-Pacific region at futures brokerage OANDA in Singapore.
“As such, we should interpret any positive developments from the meeting as support for underlying oil price sentiment.”
Suhail Mohamed Al Mazrouel, the United Arab Emirates oil minister and OPEC’s current president, said on Sunday that the oil cartel has not discussed rolling over production cuts until next year.
Rising U.S. shale oil production has been a drag on the OPEC’s commitment to erode a prolonged global oil glut and prop up prices.
U.S. crude oil production has already risen past that of top exporter Saudi Arabia, to 10.28 million barrels per day (bpd).
Only Russia pumps slightly more, but the International Energy Agency (IEA) said last week it expects the United States to take Russia’s seat as the world’s biggest crude oil producer by 2019, at the latest.
The number of oil rigs drilling for new production in the United States [RIG/U] rose to 800 for the first time since April 2015 in early March, pointing to more increases in output to come.
Speculators raised their bullish bets on U.S. crude futures and options in the week to Feb. 27 for the second consecutive week, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
Money managers also upped their bullish bets on Brent crude, InterContinental Exchange (ICE) data showed.