Commodity Roundup: Oil sheds over 1%, gold down on hawkish Fed talks (Commodity:CO1:COM)

Gold prices eased for a second-consecutive day on Wednesday as the U.S. dollar held firm amid hawkish commentary from Federal Reserve officials, while crude oil futures shed more than 1% as investors look ahead to the Fed minutes and demand signs.

Fed policymakers said on Tuesday the U.S. central bank should wait several more months to ensure that inflation was back on track to its 2% target before cutting rates. Bullion is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion.

Recent gains are also having an impact on physical demand, ANZ Research said. China’s gold imports fell 30% m/m in April to 136t, the lowest total for the year. Bucking the trend were investor flows into gold-backed ETFs, with holdings of physical metal rising five days in a row, ANZ said, citing Bloomberg data.

Crude oil prices (CL1:COM) (CO1:COM) were also pressured by weakness in the physical market. “Signs of weakness in the lead-up to the OPEC+ JMMC meeting increase the likelihood of a full rollover of supply cuts rather than a partial rollover,” ING said in a recent note.

Meanwhile, nickel prices (LN1:COM) rose, extending its rally since the beginning of the year. “Here, too, supply concerns are currently driving the price, in addition to the general expectation of a cyclical increase in demand,” Commerzbank Research analysts said.

The run-up in nickel has been mainly driven by the unrest in New Caledonia, a major mining producer. However, Commerzbank Research argues, the “concerns seem somewhat exaggerated” given that New Caledonia’s market share is only 6% based on USGS data for 2023, Indonesia has a market share of around 50%, where signs continue to point to growth.

Elsewhere, copper prices ticked lower after a record-breaking run-up, with Comex copper futures (HG1:COM) down -2.03% to $5.00/lbs.

Recent Commodity Price Movements and A look At Some ETFs