FeelPic
Gold prices ticked lower for a third-consecutive day, weighed down by a stronger U.S. dollar index (DXY), with market participants awaiting a host of global inflation data for clues on when central banks may start easing policy.
While the economic calendar looks light on Wednesday, investors would likely be focusing on consumer inflation numbers from the U.S., Germany, France and Spain on Thursday ahead of euro area figures due on Friday.
Higher-than-expected inflation in the U.S. has prompted traders to trim bets on the number of rate cuts expected from the Fed this year, while the chance of a cut in June now stands at around 60%. This compared to the start of the year, when markets were almost fully pricing a rate cut in March.
While gold is seen as an inflation hedge, rate hikes weigh on the non-interest bearing asset. Spot gold (XAUUSD:CUR) was down -0.12% to $2,027.12 an ounce by 6 am ET, while palladium shed over 2.5%
Prices of most base metals also came under pressure on a firmer dollar, while demand concerns stemming from a spike in inventories in Chinese exchange warehouses weighed on copper.
Copper inventories in SHFE warehouses more than doubled in just over two weeks to 181,323 tons on Friday, the highest since March last year, suggesting Chinese demand has not made a strong recovery since the Lunar New Year holiday, Reuters reported. The copper price decline was however limited on mine supply disruption and on hopes of demand recovery later in the quarter.
Meanwhile, ING reported that aluminum consumption in China will remain soft this year primarily due to the prolonged weakness in the country’s real estate sector, according to the latest report from Beijing Antaike Information Development Co.
ING’s short-term outlook remains neutral to bearish for demand, and it does not foresee a substantial recovery before the second quarter of 2024, which should be the starting point for Federal Reserve rate cuts. “There is a risk, however, for demand to weaken further if high inflation keeps interest rates high.”
On the energy side, oil prices fell more than 1% due to a combination of factors, including profit taking and the prospect of delays to U.S. interest rate cuts and a rise in U.S. crude stocks.
U.S. crude stocks, meanwhile, showed an 8.43 million barrel build in the week ended Feb. 23, the American Petroleum Institute figures showed. The market focus today will be on EIA’s weekly crude and fuel stock report after the API reported a bigger-than-expected increase in crude stockpiles.
Saxo Bank said, it maintains the view Brent and WTI will likely remain rangebound, respectively around $80 and $75 per barrel during the first quarter and next, but with disruption risks in the Middle East and OPEC+ production restraint potentially leaving the risk/reward skewed to the upside. “Brent, meanwhile, has got more work to do before potentially attempting a breakout, with the level to watch for that to happen being somewhat higher at USD 85.”
Elsewhere, among agriculture commodities, soybeans, wheat and cocoa traded lower.
-
Energy
Metals
Agriculture
Commodity ETFs
Gold ETFs:
Other Metal ETFs:
Oil ETFs:
Agriculture ETFs:
