GOLD – Gold rose to recover from its lowest level in nearly six weeks, supported by a softer dollar. The euro surged almost 1 percent against the dollar after European Central Bank President Mario Draghi opened the door to tweaks that might begin to reduce the Bank’s emergency stimulus to the economy shortly. Speaking to a conference in Portugal, Draghi said the central bank could adjust its policy tools of sub-zero interest rates and massive bond purchases as economic prospects improve in Europe. Fed officials have signalled they will look through a slowdown in inflation and continue on their current trajectory of interest rate hikes. But investors are skeptical and market pricing shows only a 40 percent chance of a rate hike at the Fed’s December meeting. The precious metal slid 1 percent in the previous session as a large sell order hit sentiment, though losses were limited by political uncertainty around the world. Allegations of ties to Russia have cast a shadow over U.S. President Donald Trump’s first five months in office, while the British government’s looming Brexit talks are also fueling concern about global stability. Tensions also rose as the U.S. Supreme Court on Monday handed a victory to Trump by reviving parts of a travel ban on people from six Muslim-majority countries.
CRUDE OIL – Oil prices rose and hit a one-week high, boosted by a weaker dollar, short covering and expectations that crude inventories in the United States may decline for the third consecutive week. It was the fourth straight session of gains for oil, which also got some support after the chief executive of U.S. shale oil producer Pioneer Natural Resources Co said Saudi Arabia likely will move to boost oil prices to prop its own national finances. With the end of the quarter approaching, brokers said investors were covering short positions. Industry group American Petroleum Institute (API) was due to issue its inventory data on Tuesday afternoon. On Wednesday morning, the U.S. Energy Information Administration (EIA) will report official inventory data. The Organization of the Petroleum Exporting Countries and other producing nations have sought to reduce a global crude glut with production cuts of 1.8 million barrels per day (bpd). The cuts began in January and were later extended through March. Yet global crude inventories have not fallen as expected, as U.S. producers and others outside the OPEC-led regime have boosted output. OPEC members Nigeria and Libya are exempt from the cuts and have raised production substantially. Iran has also been allowed a small increase. Libya’s oil production stands at about 935,000 barrels per day (bpd) this week after touching as high as 950,000 bpd last week, Libyan oil sources said.
ZINC AND COPPER – Zinc and copper prices touched a near three-month high on Tuesday as the dollar lost its lustre, while zinc also benefited from a decline in exchange stockpiles. Industrial metals helped by a softer U.S. currency, which makes dollar-denominated metals cheaper for non-U.S. firms when it falls, potentially boosting demand. Chinese iron ore prices surged 6 percent to one-month highs in a late burst of short covering and fresh buying that lifted steel and raw materials as investors bet on rising demand. Cancelled warrants — zinc earmarked for delivery — at more than 70 percent of LME stocks at 299,875 tones are fuelling concern of a tight LME market. Total stocks at eight-year lows are also down 35 percent since October. Premiums for zinc held in China’s bonded zones are near their highest levels this year at $195-$200 from about $130 earlier this year. The discount for cash over the three-month contract has narrowed to near zero from around $20 a tone on June 12, another sign of a tighter LME market. The nickel market is watching the Philippines where the environment minister may decide next month on the fate of dozens of mining operations and contracts that his predecessor ordered closed, suspended or cancelled. Japanese aluminum buyers have agreed to pay producers a premium of $118 to $119 per tonne for metal shipped during the July to September quarter, five sources directly involved in the pricing talks said.
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