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Gold prices rose on Tuesday, following two days of decline, propelled by an official U.S. report indicating expectations of lower inflation. This report solidified the anticipation for interest rate cuts from the Federal Reserve.
A New York Federal Reserve report on Monday unveiled that consumers are anticipating lower inflation, weaker income, and reduced spending over the next several years. Investors are now eagerly awaiting Thursday’s U.S. consumer price inflation report for further clarity on the scope and depth of the expected rate cut. Spot gold (XAUUSD:CUR) gained +0.37% to reach $2,035.34 per ounce by 6 am ET.
The estimated value of open interest in precious metals markets dropped by -3% WOW to approximately $158 billion (as of January 5th), according to JPM Commodities Research. Meanwhile, across energy markets, the estimated value of open interest surged by nearly $19 billion WOW, essentially reversing a similar magnitude decline recorded at the end of 2023. “With crude oil prices rising 2-3% WOW and prompt US natural gas prices surging by 15% over the week on colder forecasts, the total energy open interest rebound was primarily driven by price increases across the sector,” said an industry expert.
Oil prices advanced, with both benchmarks climbing more than 1.5%, as market attention once again turned to Middle East tensions and potential supply disruptions. In the prior session, Brent and WTI prices had fallen by 3% and 4% respectively, owing to sharp price reductions by top exporter Saudi Arabia and a rise in OPEC output, coupled with European wholesale gas prices plummeting to around their lowest level since last summer.
Copper prices traded in negative territory on Tuesday as traders awaited money supply data from top consumer China and the U.S. inflation report, while aluminium and zinc also experienced declines. According to Reuters, the most-traded February copper contract on the Shanghai Futures Exchange closed nearly flat at 68,220 yuan ($9,530.46) a ton. “It (copper) is pushed around by spurts of buying or selling. Algorithmic market makers are moving prices around based on their inventory,” remarked a metals trader.
Elsewhere in agricultural commodities, soybean, cocoa, and wheat futures witnessed gains. U.S. corn futures dropped to their lowest point in over three years on Monday, and soybeans slumped to a two-year low, as the sharp drops in crude oil prices spilled over into agricultural markets. The impact was due to energy markets affecting grain futures, given that corn is used to produce ethanol, and soybean oil is used for biofuels.
Key Commodity Price Movements
Energy
Metals
Agriculture
- Corn (C_1:COM) +0.25% to $456.15.
- Wheat (W_1:COM) +0.72% to $600.56.
- Soybeans (S_1:COM) +0.28% to $1,243.00.
Commodity ETFs
Gold ETFs:
- SPDR Gold Shares ETF (GLD)
- VanEck Gold Miners ETF (GDX)
- VanEck Junior Gold Miners ETF (GDXJ)
- iShares Gold Trust ETF (IAU)
- Direxion Daily Gold Miners Index Bull 2X Shares ETF (NUGT)
- Sprott Physical Gold Trust (PHYS)
Other Metal ETFs:
- iShares Silver Trust ETF (SLV)
- Sprott Physical Silver Trust (PSLV)
- Global X Silver Miners ETF (SIL)
- U.S. Copper Index Fund, LP ETF (CPER)
- abrdn Physical Palladium Shares ETF (PALL)
Oil ETFs:
- U.S. Oil Fund, LP ETF (USO)
- Invesco DB Oil Fund ETF (DBO)
- U.S. 12 Month Oil Fund, LP ETF (USL)
- U.S. Brent Oil Fund, LP ETF (BNO)
- U.S. Natural Gas Fund, LP ETF (UNG)
- U.S. Gasoline Fund, LP ETF (UGA)
Agriculture ETFs:
- Invesco DB Agriculture Fund ETF (DBA)
- Teucrium Soybean ETF (SOYB)
- Teucrium Wheat ETF (WEAT)
- Teucrium Corn Fund ETF (CORN)