Gold prices registered first weekly drop of 2017
Oil under pressure as rising U.S. drilling activity weighed
Copper fell retreats as optimism fades over Trump’s growth policies
Gold steadied on Monday as political uncertainty created by U.S. President Donald Trump’s move to ban people from seven Muslim Majority
countries, and by elections in Europe, supported prices. Traders reported subdued activity because of the Lunar New Year holiday in
many Asian countries and some nervousness before the Federal Reserve’s two-day meeting on monetary policy starting on Tuesday. The
immigration ban added to risk-off sentiment and boosted gold earlier. There is also political risk coming up in the form of elections in France and
the Netherlands. Trump’s administration tempered a key element of his immigration ban, but the move reinforced growing worries about
investing in the United States. The Fed raised interest rates in December and at that time signaled as many as three rises in 2017 as the Trump
administration takes over with promises to boost growth through tax cuts, spending and deregulation. Higher rates could mean a higher U.S.
currency, which makes dollar-denominated gold more expensive for holders of other currencies, potentially dampening demand. A negative for
gold could be speculators cutting their net long positions in the futures market, after two straight weeks of increases, according to data from the
CFTC, which also showed they raised their silver holdings to the highest since early November.
Oil prices were lower during North American morning hours on Monday, kicking the week off on negative footing as prospects of rising U.S.
production weighed on the market. Oilfield services provider Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S.
increased by 15 last weeks, the 12th gain in 13 weeks. That brought the total count to 566, the most since November 2015. The data raised
concerns that the ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and
demand. Futures have been trading in a narrow range around the low-to-mid $50s over the past month as sentiment in oil markets has been torn
between expectations of a rebound in U.S. shale production and hopes that oversupply may be curbed by output cuts announced by major global
producers. OPEC and non-OPEC countries have made a strong start to lowering their oil output under the first such pact in more than a decade as
global producers look to reduce oversupply and support prices. January 1 marked the official start of the deal agreed by OPEC and non-OPEC
member countries such as Russia in November last year to reduce output by almost 1.8 million barrels per day to 32.5 million for the next six
months. The deal, if carried out as planned, should reduce global supply by about 2%.
Copper fell more than a percent on Monday, retreating further from last week’s two-month high as optimism over U.S. President Donald
Trump’s capacity to drive economic growth faded and the dollar strengthened. Wall Street and European stocks also fell more than 1 percent as
immigration curbs put the spotlight back on the risks of Trump’s protectionist bent, spooking investors. For aluminium and copper, supply risks
have moved back into focus, he added, though a lot of good news is already priced in. If we didn’t have this supply news going on, it seems prices
would have come down rather quickly. Moves in metals were muted in Asian trade as China’s week-long Lunar New Year holiday drained the
markets of liquidity and direction. In supply news, Indonesia’s mining minister said the country may issue a temporary mining permit to the local
unit of Freeport McMoRan Inc, paving the way for the mining giant to resume exports of copper concentrate from its Grasberg mine in Papua.
Hedge funds and money managers added to their net long positions in copper futures and options in the week to Jan. 24, data from the U.S.
Commodity Futures Trading Commission showed.