BULLION – Gold prices calms down as investors were seen booking profits following robust gains over the past weeks. Even after so many months, US-China trade war has something new to offer every day. As soon as US-Mexico trade talks eased off, President Trump shifted his focus back to China, where he threatened that if China does not attend the G20 meet then US President will not hesitate to increase the tariffs rate on the remaining $300 billion worth of goods. Neither of them is ready to back down, although in the recent statements China hinted that they are ready to continue further discussion and negotiation on same. Any further updates will keep the markets active. On the data front, other than fed policy statement that is scheduled next week, market participants await CPI index data that is scheduled for release today and retail sales number that will be released later this week for indication on whether tariffs are slowing the economy.
ENERGY– Oil prices fell in early morning session after API reported another large, surprise build in crude oil inventories of 4.852 million barrels, coming in over expectations of 481,000- barrel drawdown in inventories. Cushing inventories also saw a sizable gain, and gasoline inventories grew as well. Gasoline witnessed a build of 8,29,000 bpd against estimated a build in gasoline inventories of 743,000 barrels. Distillate inventories fell by 3.461 million barrels for week, while inventories at Cushing rose by 2.365 million barrels. To add to the bearish sentiments, EIA short term outlooks forecasts shows that it estimates 2019 U.S. crude production of 12.32 million bpd, down 1% from May forecast. It also cut its 2020 output view by 0.9% to 13.26 Mbpd. For 2019, it lowered its WTI crude price outlook by 5.6% to $59.29 a barrel and its Brent view by 4.2% to $66.69. It left WTI and Brent price outlooks for 2020 unchanged at $63 for WTI and $67 for Brent.
BASE METAL – Base metals surged for yet another session with copper hitting a 2 week high lifted by hopes that top consumer China will pump money into building metals-intensive infrastructure. News that China will allow local governments to use proceeds from special bonds as capital for investment projects came after the US and Mexico reached a deal on Friday to avert US tariffs on Mexican goods, supporting prices of copper and other metals. Aluminium prices have been under pressure with rising LME inventories and an upswing in exports from top producer China fuelled worries about oversupply. Trump has said he is getting ready to meet Chinese President Xi Jinping at the Group of 20 Summit in Japan later this month, although China has yet to confirm any such meeting. China’s central bank said it will sell Yuan-denominated bills in Hong Kong in late June, which could weaken the Yuan.
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