Commodity Roundup: Gold up with focus on inflation; Gaza conflict puts floor under oil
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Gold prices rose Tuesday, after two sessions of decline, as an official U.S. report showed that consumers expected lower inflation, which cemented bets for interest rate cuts from the Federal Reserve.
A New York Federal Reserve report on Monday said consumers expected lower inflation as well as weaker income and spending over the next several years. Investors now await Thursday’s U.S. consumer price inflation report for further clarity on the scale and depth of Fed’s rate cut. Spot gold (XAUUSD:CUR) was up +0.37% at $2,035.34 an ounce by 6 am ET.
According to JPM Commodities Research, the estimated value of open interest in precious metals markets declined by -3% WOW to ~$158 billion (05 Jan). While, the estimated value of open interest across energy markets increased by nearly $19 billion WOW, essentially reversing a similar magnitude decline registered in the last week of 2023. “With crude oil prices rising 2-3% WOW and prompt US natural gas prices jumping by 15% over the week on colder forecasts, the rebound in total energy open interest was primarily driven by price increases across the sector.”
Oil prices gained on the day, with both benchmarks rising more than 1.5% as market focus once again turned to Middle East tensions and possible supply issues. Brent and WTI prices had fallen 3% and 4% in the previous session on sharp price cuts by top exporter Saudi Arabia and a rise in OPEC output, with European wholesale gas prices also down around their lowest level since last summer.
Copper prices meanwhile traded in negative territory on Tuesday as traders awaited money supply data from top consumer China and U.S. inflation report, with aluminium and zinc also trading lower. As per Reuters, the most-traded February copper contract on the Shanghai Futures Exchange closed nearly flat at 68,220 yuan ($9,530.46) a ton. “It (copper) is pushed around by spurts of buying or selling. Algorithmic market makers are moving prices around based on their inventory,” said a metals trader.
Elsewhere among agriculture commodities, soybean, cocoa and wheat futures gained. U.S. corn futures slid to their lowest in more than three years on Monday and soybeans slumped to a two-year low, as sharp drops in crude oil prices spilled over into agricultural markets; energy markets can affect grain futures because corn is used to make ethanol and soybean oil is used to make biofuels.
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