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Gold prices (XAUUSD:CUR) inched higher on Tuesday on a slight pullback in the U.S. dollar index (DXY), while markets become less convinced that the Federal Reserve is ready to press the button on interest rate cuts as early as March. Spot gold was up +0.14% at $2,023.79 by 6 am ET. A Kitco report said, concerns over China’s economy and shifting expectations surrounding the first rate cut of the Fed’s impending easing cycle are creating some solid selling pressure in the silver market, according to some analysts.
“Overnight news that China left its monetary policy unchanged and did not ease was seen as a negative for metals,” said Jim Wyckoff, senior technical analyst at Kitco.com. On the data front, investors will get their first look at the broad picture of fourth-quarter economic growth for 2023 when the Commerce Department releases its initial gross domestic product estimate on Thursday. The Commerce Department will release the December reading on the personal consumption expenditures price index a day later.
In the energy market, oil prices fell after surging 2% overnight. Traders weighed a host of conflicting supply and demand worries, from rising Middle East tensions to cold weather woes disrupting production in the United States. U.S. natural gas futures extended last week’s heavy losses on forecasts for lower demand and higher production, as the weather turns warmer than normal through early February. “As we see higher oil prices ahead, we advise investors with a high risk tolerance to sell Brent’s downside price risks or to add exposure to longer-dated Brent oil contracts,” said Giovanni Staunovo of UBS.
Meanwhile copper and most base metals ticked up against a softer dollar and improved risk sentiment as top consumer China weighed measures to increase funding and stabilise its stock market. Chinese authorities are considering a package of measures to stabilise the slumping stock market, seeking to mobilise about 2 trillion yuan, Bloomberg News reported, citing people familiar with the matter.
The estimated value of open interest across global commodity markets edged up over the week to $1.17 trillion (0.4% WOW) as gains across oil, petroleum products and agriculture markets outweighed declines in metals and environment markets (as of 19 Jan), JPM Commodities Research said.
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