Bullion counter downside momentum can persist further amid stronger greenback. In energy counter some short covering can be seen in crude oil prices.
Gold inched higher on Friday, as the dollar rally eased, although the greenback’s remarkable performance overall and fears of aggressive U.S. interest rate hikes weighed on demand for bullion and set prices for a fifth straight weekly loss. Gold has wilted in the face of a stronger U.S. dollar this week, but appears to be trying to form a temporary base ahead of $1,700.00. The dollar edged off recent 20-year highs, easing some pressure on demand for greenback-priced gold among overseas investors, after sending bullion over 2% lower on Thursday. Two of the U.S. Federal Reserve’s most hawkish policymakers said on Thursday they favoured another 75-basis-point interest rate increase at the central bank’s policy meeting this month, not the bigger rate hike traders had raced to price in after a report Wednesday showed inflation was accelerating.
The latest US inflation data triggered a broad sell-off across the industrial metals complex. Concern that the higher than expected CPI print would lead to more aggressive action from the Fed weighed on risk assets. The latest trade numbers from China showed that imports of unwrought copper jumped 15.5% MoM and 25.5 YoY to 537.7kt in June, as consumption picked up and factory production resumed following an easing in Covid restrictions. Cumulative imports rose 5.3% YoY to 2.94mt in the first half of the year. However, copper ore and concentrate imports declined 6% MoM to 2.1mt as domestic smelters carried out maintenance. Cumulative concentrate imports are still up 8.6% YoY, to 12.5mt in 1H22.
Oil prices rose on Friday amid prospects of a less aggressive U.S. rate hike, although worries about a recovery in demand capped gains. U.S. crude oil and fuel stockpiles rose last week, bolstered by another big release from strategic reserves, while demand slackened, the Energy Information Administration stated. Crude inventories rose by 3.3 million barrels in the week to July 8 to 423.8 million barrels. The IEA now expects oil demand to grow by 1.7MMbbls/d this year (compared to a previous estimate of 1.8MMbbls/d) and by 2.1MMbbls/d in 2023 (down by 100Mbbls/d from the previous forecast). The growth next year is expected to be driven by non-OECD nations. The latest trade data from China yesterday showed that crude oil imports came under pressure in June, falling 11% YoY and 19% MoM to average 8.75MMbbls/d.
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