Gold steadied on Thursday, after declining about half a percent in the previous session as the U.S. Federal Reserve did not deliver as dovish a statement as some investors had expected. The Fed raised interest rates on Wednesday and noted that “some” rate hikes would be needed next year, a more aggressive stance than many expected. In a news conference, Fed Chairman Jerome Powell said the central bank would continue trimming its balance sheet by $50 billion each month, leaving open the possibility that continued strong data could force it to raise rates to the point where they start to brake the economy’s momentum. U.S. benchmark Treasury yields fell to more than eight-month lows on Wednesday following Powell’s statement, which spurred safety buying of U.S. government debt.
As shorts covered their positions after the US dollar index fell, LME copper crept to close at $6,065/mt on Wednesday. The SHFE 1902 contract rebounded to close at 48,440 yuan/mt overnight from a low of 48,140 yuan/mt. LME copper is expected to trade at $6,010-6,070/mt today and the SHFE 1902 contract is likely to trade at 48,200-48,500 yuan/mt. Spot premiums are seen at 20-120 yuan/mt.London nickel climbed to close at $10,980/mt on Wednesday. Its SHFE counterpart also gained overnight, as shorts aggressively cut their positions, ending at 90,200 yuan/mt. LME nickel is expected to hover around $10,900/mt today with the SHFE 1905 contract at 89,000-90,500 yuan/mt. Spot prices are seen at 89,500-96,000 yuan/mt.
Oil prices fell on Thursday to erase most of their gains from the day before, resuming declines seen earlier in the week amid worries about oversupply and the outlook for the global economy. “Wednesday’s recovery was short-covering. Investors quickly moved their attention to deteriorating fundamentals in the oil markets including more signs of slowing economic growth next year, record production and the lack of confidence with OPEC’s pledge to curb production,” said Xi Jiarui, chief oil analyst at consultancy JLC. The Organization of the Petroleum Exporting Countries and other oil producers including Russia agreed this month to curb output by 1.2 million barrels per day (bpd) in an attempt to drain tanks and boost prices. Oil prices are down more than 30 percent from peaks seen in October. But the cuts will not happen until next month and production has been at or near record highs in the United States, Russia and Saudi Arabia.
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