Oil prices edged higher in European trade on Tuesday, but gains were limited as the market weighed ongoing efforts by major producers
GOLD – Gold prices stayed near the lowest level in around five weeks in European trade on Tuesday, as hawkish remarks made by an influential Federal Reserve official reinforced expectations for the Fed to keep raising interest rates. New York Fed Chief William Dudley gave an upbeat assessment of the economy on Monday and warned against the central bank taking a pause in the tightening cycle. In a business roundtable held in Plattsburg, New York, Dudley said U.S. inflation is a bit low but should rise alongside wages as the labor market continues to improve, allowing the Fed to continue gradually tightening U.S. monetary policy. Chicago Fed President Charles Evans however later said the Fed should move slowly to raise rates and trim its portfolio due to soft inflation. The U.S. central bank last week raised interest rates as widely expected and maintained plans to go ahead with another rate hike by year-end. The Fed also provided greater detail about how it plans to reduce its massive $4.5 trillion balance sheet. Despite the Fed’s relatively hawkish message, market players remained doubtful over the central bank’s ability to raise rates as much as it would like before the end of the year due to a recent run of disappointing U.S. economic data.
CRUDE OIL – Oil prices edged higher in European trade on Tuesday, but gains were limited as the market weighed ongoing efforts by major producers to cut output and reduce a global glut against a relentless increase in U.S. drilling activity. The increase in U.S. drilling activity and shale production has mostly offset efforts by OPEC and other producers to cut output in a move to prop up the market. Last month, OPEC and some non-OPEC producers extended a deal to cut 1.8 million barrels per day in supply until March 2018. Investors looked ahead to weekly data from the U.S. on stockpiles of crude and refined products.
COPPER – Barclays lowered its forecast for copper prices in the second half of 2017, according to wenhua.com. Copper prices may fall to $2.50 per pound in the second half of this year due to slower demand, which is a result of tightening credit in China. India’s major brass and copper scrap prices remained flat on the Scrap Register Price Index as on Thursday, while copper futures prices at India’s Multi Commodity Exchange advanced slightly, after the U.S. Federal Reserve raised rates for the second time this year, boosting financing costs for industry.
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