Base metals prices were mostly traded lower amid quiet trading conditions and a recovery in the dollar. Traders in the commodities market are likely to remain cautious leading up to this week’s US jobs report.
BASE METALS : Base metals prices were mostly traded lower amid quiet trading conditions and a recovery in the dollar. Traders in the commodities market are likely to remain cautious leading up to this week’s US jobs report. However, liquidity will remain low with China’s markets closed. With Chinese markets, including the Shanghai Futures Exchange, closed for the country’s National Day Golden Week holiday (October 2-6), trading has been quiet. The dollar index halted its decline after the release of strong US economic data on Wednesday. The ADP non-farm employment change in September came in at 135,000, above an expected reading of 131,000, while the ISM non-manufacturing purchasing managers’ index (PMI) for September stood at 59.8, higher than the forecast print of 55.5. US Federal Reserve chairwoman Janet Yellen did not comment on monetary policy in her opening remarks at a banking conference in St Louis, USA on Wednesday, however the dollar is generally seeing support from increased expectations of a US interest rate increase in December.
Gold Prices Edge Slightly Higher, Gains Capped – Gold prices edged slightly higher on Thursday, as investors eyed upcoming U.S. data and speeches by Federal Reserve officials, but gains were expected to remain limited as Wednesday’s upbeat U.S. economic reports continued to support demand for the dollar. The greenback remained supported after the Institute of Supply Management reported on Wednesday that U.S. service sector activity expanded at its fastest rate in 12 years in September. The data came shortly after payrolls processor ADP said the U.S. private sector added 135,000 jobs last month, beating analyst’s projections. But the greenback’s gains were capped amid speculation the next Fed head could be less hawkish than expected continued to weigh. Fed Governor Jerome Powell and former governor Kevin Warsh were both interviewed at the White House last week to replace current Fed Chair Janet Yellen next February. The two men are seen as serious candidates, but Powell is considered as more dovish than Warsh, who has criticized the Fed’s bond-buying programme in the past. Gold is sensitive to moves in the dollar. A weaker dollar makes gold less expensive for holders of foreign currency. Jerome Powell was scheduled to speak about the Treasury Markets Practices Group at the Federal Reserve Bank of New York later Thursday, while Federal Reserve Bank of Philadelphia President Patrick Harker was also set to deliver a speech in Texas. Market participants were also looking ahead to U.S. data on unemployment claims, trade balance and factory orders due later Thursday, for further indications on the strength of the economy.
Saudi’s Falih says oil agreements with Russia helping market stability – Agreements reached between Russia and Saudi Arabia on global oil supply have helped oil markets to stabilize, Saudi Energy Minister Khalid al-Falih said on Thursday. The two countries, the world’s biggest producers of crude, helped secure a deal between OPEC and rivals including Russia to cut supplies until the end of March 2018 in an effort to reduce a price-sapping glut. Falih, whose country is the de facto leader of the 14-member Organization of the Petroleum Exporting Countries, also said he welcomed the contribution of U.S. shale oil supplies as global demand for crude was on the rise. “Shale coming in and happening again in 2018 doesn’t bother me at all. The market can absorb it,” Falih said, speaking alongside Russian Energy Minister Alexander Novak as part of a panel discussion at an energy forum in Moscow. The comments came a day after Russian President Vladimir Putin said the supply-cutting deal could be extended to the end of 2018, a longer timeframe than others have suggested. Novak said Moscow would support the possible participation of additional countries in the output deal, and that he was satisfied with current oil prices. Oil steadied around $56 a barrel on Thursday on expectations that Saudi Arabia and Russia would extend production cuts. Saudi Arabia wants to develop ties with Russia further, particularly in the private sector. “I see huge opportunities in front of our countries and for the business sector in both nations,” Falih said.
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