Gold held on to a small loss from the previous session on Monday, amid expectations of a U.S. Federal Reserve interest rate hike in September and fears of escalating trade tensions between the United States and China. U.S. jobs growth accelerated in August, with wages notching their largest annual increase in nine years, strengthening views the economy was so far weathering the Trump administration’s escalating trade war with China. The stronger-than-expected payrolls data cemented expectations that the U.S. Fed will raise interest rates in September, in what would be its third hike this year. The Federal Reserve should keep raising U.S. interest rates until mid-2019, and only then needs to take a decision on when it ought to stop, Dallas Fed President Robert Kaplan suggested on Friday. U.S. President Donald Trump warned on Friday he was ready to slap tariffs on virtually all Chinese imports into the United States, threatening duties on another $267 billion of goods on top of $200 billion in imports primed for levies in coming days. Central banks will be in focus with the European Central Bank and Bank of England both meeting this week. The ECB is expected to signal it is ready to start tapering bond purchases, but President Draghi is likely to sound cautious after a run of mediocre to softening euro zone data. Hedge funds and money managers increased their bearish stances in COMEX gold and silver contracts to the biggest on record in the holiday-shortened week to Sept. 4, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday
London copper was trading steady on Monday morning after it registered its second weekly loss as an intensifying trade war between the United States and top metals consumer China raised concerns over demand. For the week, LME and Shanghai copper are down 1.7 percent. U.S. President Donald Trump has said he is prepared to quickly ramp up the trade war with China and has told aides he is ready to impose fresh tariffs on $200 billion worth of Chinese imports as soon as a public comment period on the plan ends. China will be forced to retaliate if the United States implements any new tariff measures, China’s commerce ministry warned on Thursday. Road access to MMG Ltd’s Las Bambas copper mine in Peru, which was blocked by protesters last week, has been restored and company logistics are operating normally, the company said late on Wednesday. European customers will avoid deals with Russia’s United Company Rusal, under U.S. sanctions, when the industry meets in Berlin next week to seal 2019 metal supply agreements, three sources familiar with the discussions said. On-warrant stocks of copper available to the market in LMEregistered warehouses rose by 850 tonnes to 147,450 tonnes but are still down from more than 234,000 tonnes in mid-August, signalling a tighter market. Stockpiles in Shanghai Futures Exchange (ShFE) warehouses have fallen to 136,051 tonnes from more than 300,000 tonnes in April.
Oil prices rose on Monday as US drilling for new production stalled and as the market eyed tighter conditions once Washington’s sanctions against Iran’s crude exports kick in from November. US energy companies cut two oil rigs last week, bringing the total count to 860, energy services firm Baker Hughes said on Friday. The US rig count has stagnated since May, after staging a recovery since 2016, which followed a steep slump the previous year amid plummeting crude prices. Outside the United States, new US sanctions against Iran’s crude exports from November were helping push up prices. Several major Iran customers like India, Japan and South Korea were already cutting back on Iran crude. While Washington exerts pressure on other countries to fall into line and also cut imports from Iran, it is also urging other major producers to raise their output in order not to create too strong a price spike. US Energy Secretary Rick Perry will meet counterparts from Saudi Arabia and Russia on Monday and Thursday, respectively, as the Trump administration seeks the world’s biggest exporter and producer to keep output up. One key question going forward is how demand develops amid the trade dispute between the United States and China, as well as general emerging market weakness.
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