Gold prices pulled back on Tuesday as the dollar strengthened before U.S. inflation data, while copper prices lost more than 1% as investors assessed economic uncertainty, with crude oil trading below $80 a barrel.
Bullion is considered a hedge against geopolitical and economic uncertainties and tends to thrive in a low-interest-rate environment. Therefore, ongoing elevated geopolitical tensions have limited losses in gold.
Israeli military strikes on Khan Younis on Monday killed at least 18 people and wounded several, while the Ukrainian military said its troops now hold 1000 sq km of Russian territory in the ongoing assault.
On the economic data front, investors were waiting for U.S. producer price index inflation data later in the day, before the more closely watched consumer price inflation numbers on Wednesday. Both will help guide Federal Reserve interest rate policy.
Copper markets meanwhile assessed threats to supply amid fear of uneven demand.
Zambia agreed with the Democratic Republic of Congo, the world’s second-largest copper producer, that three border gates connecting them would be reopened Tuesday following their closure over the weekend.
Demand for base metals is expected to remain muted in top consumer China.
Copper had extended its rebound on Monday from the lowest close in five months, as orders to withdraw the metal from London Metal Exchange warehouses suggested China’s demand slump may have bottomed out.
The situation in the oil market, too, was no different as the complex came under pressure this morning as slowing demand concerns outweighed fears of ongoing tensions in the Middle East.
The Organization of the Petroleum Exporting Countries expects global oil demand to grow by 2.11m b/d in 2024 (vs earlier estimates of 2.25m b/d) and by a further 1.78m b/d (vs previous forecasts of 1.85m b/d) in 2025, it said in its latest monthly oil market report. However, these numbers are still stronger than those forecasted by the Energy Information Administration and the International Energy Agency.
U.S. crude oil surged to its biggest dollar gain since last October in Monday’s trading, as heightened fears of a potential response by Iran to the recent assassination of a top Hamas leader in Tehran outweighed a dip in broader markets.
Elsewhere, the United States Department of Agriculture’s latest WASDE report was a largely bearish affair, particularly for corn and soybeans, ING analysts said in a note. The USDA revised up its 2024/25 US corn production estimates by 47m bushels to 15.14bn bushels on higher yield. The market was expecting production estimates of around 15.12bn bushels, the brokerage added.
Recent Commodity Price Movements and A look At Some ETFs
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Energy
Metals
Agriculture
Commodity ETFs
Gold ETFs:
Other Metal ETFs:
Oil ETFs:
Agriculture ETFs: