Gold fell on profit-taking on Friday, a day after bullion touched a near six-month high and the dollar rebounded, but the metal stayed on track for a weekly gain as the appetite for risk waned. “There was some profit-taking as the US dollar remains resilient,” said Tai Wong, head of base and precious metals derivatives trading at BMO. “Friday’s data saw softer growth but price indicators like personal spending and per capita expenditure was stronger which could argue, at the margin, against a Fed rate hike pause.” The U.S. economy slowed slightly more than previously estimated in the third quarter, but U.S. consumer spending increased solidly in November as households bought motor vehicles and spent more on utilities, data by the U.S. Commerce Department showed. Dollar recovered, attracting safe-haven buying as persistent equity market turbulence and possibilities of a U.S. government shutdown taxed investors’ affinity for risk-taking.
Risk aversion pushed shorts to exit the market, which buoyed the SHFE 1902 contract to a high of 48,410 yuan/mt near closing, and settled it at that level today. The 48,210 yuan/mt level provided support as it hovered at lows in the morning. The contract returned back above the daily moving average, with open interest down 8,952 lots to 191,000 lots. Some 206 million yuan of capitals flew out of all SHFE copper contracts, the greatest among base metals. We expect the 1902 contract to test resistance at 48,500 yuan/mt tonight. The SHFE 1905 contract continued to consolidate between moving averages today, with the highest level at 90,410 yuan/mt. An increase of shorts in the afternoon ended it slightly lower on the day at 89,750 yuan/mt. As its MACD red line shortened, we see it hovering around 90,000 yuan/mt tonight.
Oil prices fell on Friday to their lowest since the third quarter of 2017, heading for losses of more than 11 percent in a week, as global oversupply kept buyers away from the market ahead of holidays over the next two weeks. Crude has lost ground along with major equity markets as investors fret about the strength of the global economy heading into next year. The prospect of a possible government shutdown in the United States, the world’s biggest oil consumer, has added to investors’ worries. Markets have pulled back amid concerns about oversupply, despite planned production cuts by the Organization of the Petroleum Exporting Countries. “OPEC folks are not doing a good job of convincing the international oil community that they are going to be a strong advocate of their supply cut program,” said Bob Yawger, director of futures at Mizuho in New York. The price declines were exacerbated by thin trade and risk aversion ahead of the Christmas and New Year holidays, traders said.
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