Commodity Snapshot shows Gold prices dropped over 1% on Thursday, falling below $2,300 an ounce due to a firmer U.S. dollar index, while oil prices gained after a sharp fall in the previous session.
The Fed maintained interest rates unchanged, but Chair Jerome Powell acknowledged progress towards restoring inflation to its 2% target and refrained from a imminent rate hike.
Powell’s decision to halt further hikes reassured traders, boosting gold prices to above $2,300, according to City Index senior analyst Matt Simpson.
Simpson predicts gold could hold above $2,000 for the remainder of the year and break above $2,500 due to a softer NFP figure and central bank accumulation.
Lower interest rates have boosted the appeal of holding non-yielding bullion, but geopolitical tension in the Middle East is easing, causing pressure on oil and cocoa prices. ING analysts warn this could potentially return to the market.
OPEC oil output fell in April due to lower exports from Iran, Iraq, and Nigeria, and voluntary supply cuts by some OPEC+ members. Copper prices also fell, despite manufacturing activity in China boosting demand.
Energy
Crude oil (CL1:COM) +0.80% to $79.63.
Natural Gas (NG1:COM) +2.12% to $1.97.
Metals
Palladium (XPDUSD:CUR) -0.42% to $952.50.
Platinum (XPTUSD:CUR) -0.47% to $961.60.
Gold (XAUUSD:CUR) -1.09% to $2,298.42
Agriculture
Corn (C_1:COM) -0.77% to $447.29.
Wheat (W_1:COM) -1.37% to $591.04.
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Gold prices are expected to gain for the first time since October due to the US Federal Reserve’s anticipated interest rate cut in June. The Reserve Bank of India’s gold holding increased to 812.3 tonnes in January, from 803.58 tonnes in December 2023. However, Commerzbank sees limited upside potential due to the mystery surrounding the price increase. It is unlikely that gold prices will fall back to February levels, as the Fed is expected to cut interest rates in June.
Spot gold was trading -0.3% lower at $2,176.89 an ounce as markets awaited the release of U.S. CPI data, which could influence the Federal Reserve’s policy path. A hotter-than-expected reading could delay the central bank’s easing cycle. Low interest rates help bullion by reducing the opportunity cost of holding the zero-yielding asset. A mixed tone prevailed across commodity sectors, with China’s economic growth concerns affecting bulks and supply concerns supporting industrial metals.
Natural gas and crude oil prices were trading in the green, while oil prices fell earlier due to persistent demand concerns in China. NS Trading president Hiroyuki Kikukawa said that concerns over weak demand in China outweighed the extension of supply cuts by OPEC+. Mixed US jobs data prompted some traders to adjust positions. However, losses will be capped by increased geopolitical risk, with the possibility of a ceasefire in the Hamas-Israel war and conflict expansion in Russia and its neighbors. Europe remains the most impacted region, as oil product shipments from Asia have fallen since January. OPEC+’s voluntary production cut agreement could tighten the market as demand recovers from its seasonal lull.
Natural gas and crude oil prices were trading in the green, while oil prices fell earlier due to persistent demand concerns in China. NS Trading president Hiroyuki Kikukawa said that concerns over weak demand in China outweighed the extension of supply cuts by OPEC+. Mixed US jobs data prompted some traders to adjust positions. However, losses will be capped by increased geopolitical risk, with the possibility of a ceasefire in the Hamas-Israel war and conflict expansion in Russia and its neighbors. Europe remains the most impacted region, as oil product shipments from Asia have fallen since January. OPEC+’s voluntary production cut agreement could tighten the market as demand recovers from its seasonal lull.