Gold prices edged lower in European trade on Tuesday, moving back towards the lowest level in around four months
GOLD – Gold prices edged lower in European trade on Tuesday, moving back towards the lowest level in around four months as investors awaited comments from Federal Reserve Chair Janet Yellen for fresh cues on policy direction. Fed Chair Janet Yellen is set to deliver her semi-annual monetary policy testimony on the economy before Senate and House committees in Washington DC later this week. Her comments will be monitored closely for any new insight on the timing of the next U.S. rate hike and clues on how the central bank plans to pare back its massive balance sheet. San Francisco Fed President John Williams said Tuesday in Sydney that it was a reasonable view to expect one more rate hike this year, and his own view was to start adjusting the central bank’s balance sheet in the next few months. The Fed hiked rates at its June meeting and stuck to its forecast for one more rate hike this year, but the subdued inflation outlook has since raised doubts over whether the U.S. central bank will be able to stick to its planned tightening path. Futures traders are pricing in around a 50% chance of a hike by the end of the year, according to Investing.com’s Fed Rate Monitor Tool. The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.
CRUDE OIL – China has opened more than 6,000 trading accounts for its long-awaited crude futures contract – with three-quarters coming from individual traders – as it pushes ahead with plans to compete with global pricing benchmarks. China’s oil majors and about 150 brokerages have also registered, but the strong interest by ‘mom-and-pop’ investors looks set to mark out China’s crude futures from western counterparts, which are dominated by institutional investors. Shanghai International Energy Exchange (INE), which will run China’s contract, says it is finalizing technical issues. The contract has faced years of delays and there is still no set date, but INE and also trading participants now say a launch this year is almost certain. “The INE is striving to launch the crude oil futures within this year,” a spokeswoman said, adding that the exchange has conducted four trials to ensure it is technically ready. Oil futures trading volume is small during Asian hours despite the region’s role as the world’s top consumer. Shanghai’s crude futures are aimed at giving China more clout in pricing crude in Asia and a share of the trillions of dollars in oil futures trade. Earlier attempts to establish an Asian derivative crude contract by Singapore and Tokyo foundered. The only liquid crude futures in the region is the Oman contract on the Dubai Mercantile Exchange.
COPPER – Rodrigo Valdes, Chile’s Finance Minister, said the Ministry raised the average copper price forecast from $2.20 to $2.50 per pound, foreign media reported. Copper prices have slowly begun recovering from multi-year lows, and demand has shown signs of improving, while strikes and political disputes have tightened copper supply. Outbound shipments of aluminum and nickel from Russia to non-CIS countries fell during the first five months of 2017, according to Federal Customs Service, but exports of copper grew to those countries.
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