COM - Commodity Roundup: Gold firms as inflation test looms; JPM sees near-term prices at low $1900s
2023-11-14 05:59:07 ET
Precious metal prices traded in green on Tuesday as the U.S. dollar index ( DXY ) ticked lower, while gold prices were moving in a tight range as investors maintained caution ahead of U.S. inflation data for fresh impetus.
Federal Reserve Chair Jerome Powell said in recent remarks, the central bank remains steadfast in getting policy in line with its 2% target, but are unsure whether they’ve done enough to keep the momentum going.
Lower rates tend to be beneficial for bullion as it decreases the opportunity cost of holding the non-yielding asset.
JPM in a note said, while geopolitical risk premium in other assets, including oil, were much quicker to unwind, gold’s risk premium has finally begun to erode in the last week too as the scale of the conflict in the Middle East has remained relatively contained for now. "Expects prices to once again restabilize in the low $1,900s in the coming months, essentially marking time until the final approach towards our expected 3Q24 Fed cut becomes unambiguous, sparking a more sustained resurgence in gold prices."
Spot gold ( XAUUSD:CUR ) was steady at $1,946.80 by 0552 am ET.
Oil prices also edged up as the International Energy Agency raised its demand growth forecasts, adding to bullish sentiment from the previous day's OPEC outlook.
The IEA raised its oil demand growth forecasts for this year and next despite an expected slowdown in economic growth in nearly all major economies.
Meanwhile, the U.S. plans to buy 1.2 million barrels of oil to help replenish the Strategic Petroleum Reserve after it sold off the largest amount ever last year, the Energy Department said on Monday, Reuters reported. The department said the planned purchase for the oil is at an average price of $77.57 a barrel from two companies after 18 bids were submitted.
U.S. natural gas futures meanwhile were trading higher on colder weather forecasts. Bloomberg reported that, pipeline natural gas deliveries to the Freeport LNG export plant in Texas are expected to almost halt on Tuesday, according to data compiled by BloombergNEF, indicating that the facility’s production is shut.
Among base metals, copper prices eased slightly as investors stayed on the sidelines ahead of U.S. inflation data that could offer more cues on the Fed's stance on monetary policy.
"Robust credit data from China raised some hope of stronger demand. Investors were also circumspect ahead of key inflation data in the US," ANZ analysts said in a note.
Elsewhere, the U.S. Department of Agriculture on Monday rated 47% of the U.S. winter wheat crop in good-to-excellent condition, down three percentage points from the previous week but still the highest for this time of year since 2019, as per reports. Among commodities, soybeans and cocoa were trading higher, while wheat futures fell.
Recent Commodity Price Movements
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Energy
Metals
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Palladium ( XPDUSD:CUR ) -0.02% to $981.31.
- Silver ( XAGUSD:CUR ) +0.58% to $22.43.
- Copper ( HG1:COM ) -0.12% to $3.65.
Agriculture
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Commodity Roundup: Gold firms as inflation test looms; JPM sees near-term prices at low $1,900s