Precious metals inched lower on Wednesday with gold trading around $2,033.46 an ounce by 6 am ET, markets focused on speeches by U.S. Federal Reserve officials, after strong data hurt rate cut optimism.
Fed speakers are expected to reiterate that while March might be too early for a rate cut, they just need more of the same on the inflation front in order to start their cutting cycle, Daniel Ghali, commodity strategist at TD Securities told Reuters.
Gold has held above $2,000/oz despite investors cutting their long positions. ETFs have cut their holdings of gold for 13 straight days, bring this year’s net sales to 1.75Moz according to Bloomberg data.
Among base metals, copper prices ticked down, with other metals trading within a narrow range on Wednesday ahead of a long public holiday in top consumer China. Demand for metals remained weak as China prepares for the Feb. 9-16 holiday to celebrate the Lunar New Year.
Crude oil futures meanwhile gained supported by data showing U.S. oil stocks grew less than expected and the U.S. sharply cut its forecast for the country’s oil output growth, which eased some oversupply concerns. However, the US Energy Information Administration lowered its expectations of growth in 2024. UBS on the other hand said, with OPEC+ likely to extend production cuts to mid-year, we continue to see the oil market as slightly undersupplied and look for Brent to move into a USD 80–90/bbl range over the coming months.
Brokerage ANZ noted that, easing tensions has seen the geopolitical risk premium fade, but traders remain on edge as US vowed more strike against Iran’s forces and its proxies in the Middle East.
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