Commodity Capsule: Gold continues to decline as Brent crude oil edged upward
Commodity Capsule: Concerns about a larger Middle East war eased, increasing investors’ risk appetite and decreasing the demand for metal as a safe haven. However, gold prices continued to decline on Tuesday, closing the day close to a three-week low.
American gold futures dropped more than $20 to $2,320 an ounce.
In an apparent effort to prevent a regional escalation, Tehran played down Israel’s counterattack drone strike on Iran.
Last week, decision-makers—among them US Federal Reserve Chair Jerome Powell—refused to provide any indication as to when interest rates would be lowered, stating instead that monetary policy must remain tight for an extended period of time.
To learn more about the direction of monetary policy, markets are waiting for the publication of the Fed’s favored inflation indicator, the personal consumption expenditure data for March.
Despite the fact that rising US inflation is delaying the Fed’s shift to looser policy, policymakers at the European Central Bank have stuck to their intentions to lower interest rates many times this year.
Tuesday saw a decline in nonferrous metal prices as Asian traders and investors reacted cautiously after several sessions of high price increases, which were partially caused by speculative trading.
On the London Metal Exchange, copper dropped more than $100 to less than $9,750 a metric ton. The Shanghai Futures Exchange’s June copper contract dropped by 2% to 78,540 yuan per ton.
LME copper has increased by 14% so far this month. In the last session, it came dangerously close to the $10,000 resistance level.
Almost every session in April has seen SHFE copper set new records.
The surge in metal prices has been fueled by speculative trading, protective measures against sticky inflation, interruptions in certain metals’ supply, and some encouraging macroeconomic indicators.
The three-month contract for LME cash aluminium saw a premium of $27.09 per ton, the largest since June of last year, suggesting a shortage of the metal in the near future.
The number of aluminum LME canceled warrants has increased to 348,000 tons, the largest level since February 2022.
Lead warrant cancellations surged to 129,650 tons, the most since June 2013.
Following a decline in the previous session, oil prices marginally increased on Tuesday as investors continued to evaluate the risk associated with Middle Eastern geopolitical worries.
Futures for the global benchmark Brent crude oil surged over $87 per barrel. WTI oil futures in the US increased beyond $82 per barrel.
On indications that the recent escalation of hostilities between Israel and Iran had no immediate effect on oil supply in the area, both benchmarks dropped during the previous session.
ANZ emphasized that the US has approved additional sanctions against Iran’s oil industry, which extend the existing penalties to international ports, ships, and refineries that knowingly handle or transport Iranian petroleum.
Investors are anticipating the publication of the personal consumption expenditure statistics for March and the US GDP numbers.
