Gold is firm as traders wait for clarity on Trump’s tariff plans
Bengaluru — Gold prices held steady on Thursday as investors awaited more details on US President Donald Trump’s proposed steel and aluminium tariffs, the outcome of the European Central Bank’s (ECB’s) policy meeting, and US jobs data.
Spot gold rose 0.2% to $1,327.48/oz by 3.09am GMT. It hit a one-week high on Wednesday at $1,340.42, before closing at $1,325.49/oz. US gold futures were mostly unchanged at $1,32.20.
“We see gold as a good hedge against rising equity market volatility and heightened political risks around trade tariffs, the Nafta deal and North Korea,” ANZ analysts said in a note.
Asian shares found some relief on Thursday as the fear about a global trade war amid Trump’s push to introduce protectionist tariffs was tempered by signs that the move could include carve-outs for key partners.
The White House said late Wednesday that Canada, Mexico and possibly other countries may be exempted at least for a while from the proposed steel and aluminium tariffs. Trump is expected to sign a presidential proclamation establishing the tariffs during a ceremony scheduled for 8.30pm GMT on Thursday, a source familiar with the situation said.
“Gold is going to be choppy here and remain in range-bound trading.… It is finding some support in the downside around $1,300 levels due to safe-haven demand,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
Investors are also awaiting US nonfarm payroll data due on Friday for more clarity on the pace of US rate increases.
Businesses were reporting persistent labour market tightness across the US, with accelerating wage gains in many regions, the Federal Reserve said on Wednesday in a report that bolstered the case for interest rate increases.
“In the medium term, gold will come under some pressure from interest rate hikes and will recover as it has done in the past,” Fung said.
The European Central Bank (ECB) is all but certain to keep policy unchanged on Thursday but may tweak its communication stance to offer at least a few clues about its progress towards ending its unprecedented bond purchases later this year.
Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), fell 0.03% to 833.73 tonnes on Wednesday from Tuesday.
Spot silver rose 0.2% to $16.53/oz.
Platinum was up 0.1% at $953.10, after hitting its lowest since Jan. 4 at $945.70 in the previous session. Palladium edged up 0.3% to $971.72, after dropping to its lowest since February 9 at $961.55 on Wednesday.
Tariff-linked metals revive on hopes of partial exemptions
(Reuters) – Metals at risk of a tariff on U.S. imports largely recovered from steep falls on Thursday after an official said certain key partners could be exempt from duties allaying concerns over demand.
* TARIFFS: Concerns that the U.S. could slap down import tariffs on steel, impacting zinc, used in galvanised steel and nickel, used in stainless steel, as well as aluminium have dragged those metals in the past week.
* TRUMP: U.S. President Donald Trump plans to offer Canada and Mexico a 30-day exemption from planned tariffs on steel and aluminium imports, which could be extended based on progress in NAFTA talks, a White House official said on Wednesday night.
* PRICES: Prices of aluminium and zinc that were sold down on Wednesday recovered by more than half a percent. LME nickel slipped half a percent, having fallen less severely in the previous session.
* COPPER: London Metal Exchange copper traded flat at $6,947 a tonne by 0254 GMT, after falling 0.8 percent in the previous session. Shanghai Futures Exchange copper traded down 0.6 percent at 52,370 yuan ($8,275) a tonne.
* JAPAN ECONOMY: Japan’s economy expanded more than initially estimated in October-December due to an upward revision of capital expenditure and inventory data, confirming an eighth consecutive quarter of growth.
* DRC: Democratic Republic of Congo President Joseph Kabila will soon sign into law a new mining code, the government and the country’s mining companies said on Wednesday. The code has been vigorously opposed by the miners.
* ERG: Debt-laden Kazakh miner Eurasian Resources Group (ERG) has revived efforts to sell its Frontier copper mine in Democratic Republic of Congo (DRC) despite a drop in valuation to about $400 million, two banking sources said.
* U.S. ECONOMY: When Donald Trump became president last year he vowed to make American manufacturing giants, such as Harley-Davidson and Caterpillar great again. But a year later, the two companies stand to take a hit from his policies
Crude oil steadies after big fall, but soaring US crude output still weighs
Oil prices steadied on Thursday after falling the previous day on the back of record US crude production and rising inventories.
Brent crude futures were at $64.49 per barrel, up 15 cents, or 0.2 per cent, from their previous close.
That slight rise came after a more than 2 per cent fall the previous day. US West Texas Intermediate (WTI) crude futures were at $61.29 a barrel, up 14 cents, or 0.2 per cent. WTI also fell by more than 2 per cent the previous session.
The slight recovery on Thursday came amid a US crude inventory build that was not as big as expected during the current seasonal demand lull at the end of winter, when many oil refineries shut down for maintenance. “Oil prices bounced back immediately after the release of the weekly oil inventories data from the Energy Information Administration … (where) the headline figure was better than expected,” said Fawad Razaqzada, market analyst at futures brokerage Forex.com.
The EIA reported late on Wednesday that US crude inventories rose by 2.4 million barrels in the week to March 2, to 425.91 million barrels, less than the 2.7 million barrel increase analysts had forecast. Despite this, oil markets remain under pressure from the seasonal trend of rising inventories, which in the United States have climbed back above the 5-year average of 420 million barrels. Also looming over oil markets is soaring US production, which last week marked another record, at 10.37 million barrels per day (bpd).
“Crude is…under pressure from rising US production which hit a new high last week, now firmly above Saudi Arabia’s production level,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.
At just below 11 million bpd, only Russia currently produces more crude oil than the United States, although the International Energy Agency (IEA) expects even this to change as the United States is set to surge past 11 million bpd by late 2018.
With US output outpacing demand growth, analysts say the Organization of the Petroleum Exporting Countries (OPEC) and Russia, who together with some other producers have been withholding production in order to prop up prices, are under pressure to keep up the supply restraint, even at the cost of market share. “OPEC may…have to extend its production agreement with Russia and co in order to avoid triggering another 2014-style sell-off in oil prices,” said Razaqzada.