Energy and bullion counter can witness short covering from lower levels as outcome of today US non farm payroll data will give further direction to the prices.
Gold firmed on Friday as the dollar came slightly off two-decade highs, but bullion was set to post its biggest weekly drop in more than a month as the elevated greenback hit demand. The number of Americans filing new claims for unemployment benefits unexpectedly rose last week and there are growing signs that demand for labour is cooling, with layoffs surging to a 16-month high in June, as the Federal Reserve’s aggressive monetary policy tightening stokes recession fears. Two of the Fed’s most vocal hawks on Thursday said they would support another 75 basis-point interest rate increase later this month but a downshift to a slower pace afterward, even as both downplayed the risk of higher borrowing costs pushing the U.S into recession. Rising short-term U.S. interest rates and bond yields increase the opportunity cost of holding gold, which yields no interest.
News of possible stimulus measures in China recently pushed copper prices up sharply from a 20-month low the day before, but upside still limited as rising interest rates stifle global economic growth. International Monetary Fund (IMF) head said the economic outlook had “darkened significantly” and could not rule out a possible global recession next year. German industrial production rose less than expected in May, adding to a run of weak manufacturing data around the world. The dollar is near 20-year highs and expected to remain strong for at least the next three months, making dollar-priced metals costlier for non-U.S. buyers. China announced a raft of new steps to spur consumer demand for cars, saying it would consider extending a tax break on electric vehicles and build more charging stations. Copper output in Peru fell 11.2% in May from a year earlier, the Energy and Mines Ministry said, after a stoppage at the Las Bambas mine and lower-quality production in other deposits.
Oil prices slipped in Asian trade on Friday as recession fears continued to weigh on sentiment, though worries over tight global supplies capped price declines. In recent weeks oil prices have slid, fanning fears of a sharp economic slowdown and a hit to demand for commodities. Traders are watching for possible oil supply disruptions at the Caspian Pipeline Consortium (CPC), which has been told by a Russian court to suspend activity for 30 days. Meanwhile Brent monthly spreads remain in wide backwardation, referring to prompt-month prices trading higher than those for future months. According to the IEA forecast total Natural gas global consumption will contract slightly in this year and see only limited growth in the next three years of about 140 billion cubic meters between 2021 and 2025.
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