GOLD – Gold inched lower on Tuesday while touching a five-week low earlier in the session as a key U.S. Federal Reserve official reaffirmed its hawkish stance on interest rate hikes. However, Risk aversion due to Brexit, concerns over U.S. President Donald Trump’s ability to carry out financial reforms, election results in Europe and Middle East turmoil has provided some support for gold. Spot prices touched a low of $1,242.61 an ounce early in the session, the weakest since May 17, after New York Fed President William Dudley reinforced that recent weak data is unlikely to derail plans to keep raising interest rates. Gold is used as an alternative investment during times of political and financial uncertainty. British and EU Brexit negotiators agreed how to organize talks on Britain’s divorce at a first meeting in Brussels on Monday, where both sides stressed goodwill but also the huge complexity and tight deadline. Late Monday, Chicago Fed President Charles Evans said it may be worthwhile for the U.S. central bank to wait until year-end to decide whether to raise rates again and that it should move slowly to raise them and trim its massive bond portfolio.
CRUDE OIL – Oil prices fell to seven-month lows on Tuesday after news of increases in supply by several key producers, a trend that has undermined attempts by OPEC and others to support the market through reduced output. Benchmark Brent dropped $1.29 to a low of $45.62 a barrel, its weakest since Nov. 15, two weeks before OPEC and other producers agreed to cut output by 1.8 million barrels per day (bpd) for six months from January. The U.S. crude futures contract for July, due to expire later on Tuesday, fell $1.27 to $42.93, its lowest since Nov. 14, before recovering to around $43.10. Both benchmarks are down more than 15 percent since late May, when the Organization of the Petroleum Exporting Countries, Russia and other producers extended limits on output until the end of March 2018. OPEC and non-OPEC oil producers’ compliance with the deal to cut output reached its highest in May since they agreed on the curbs last year, reaching 106 percent last month, a source familiar with the matter said. OPEC supplies, however, jumped in May as output recovered in Libya and Nigeria, both exempt from the production reduction agreement. Libya’s oil production rose more than 50,000 bpd to 885,000 bpd after the state oil company settled a dispute with Germany’s Wintershall. Nigerian oil supply is also rising. Exports of Nigeria’s Bonny Light crude are set to reach 226,000 bpd in August, up from 164,000 bpd in July, loading programs show. U.S. oil production has been rising quickly this year, feeding the global glut.
ZINC – Zinc prices retreated on Tuesday after hitting their highest in more than two weeks as investors sought to balance concerns about tightening supplies with uncertainty over Chinese demand. A steady stream of news has encouraged the bulls recently, including a talk of a market deficit, an expected strike in major producer Peru and declining inventories. But monetary tightening in China has stoked worries about the appetite for industrial metals in its biggest market. Benchmark zinc on the London Metal Exchange closed 0.04 percent down at $2,555 a tonne, retreating from an intraday peak of $2,581.50, the highest since June 1. In other metals, LME nickel shed 2.1 percent to end at $8,820 a tonne. Prices received a fillip on Monday from news that about a dozen newly constructed nickel smelters in Indonesia have stopped operations because of a plunge in prices. LME copper ended 1.2 percent weaker at $5,657 a tonne while lead gave up 0.1 percent to $2,127.50. LME aluminium finished unchanged at $1,886.50 a tonne, supported by continued concern about a crackdown by the Chinese government on illegal and polluting smelters.
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