A widely-followed proxy for commodity prices continued to flirt with its 52-week lows on Thursday amid ongoing strength in the US dollar against a backdrop of choppy trading in stockmarkets around the world as China said it would retaliate against the latest round of US trade tariffs and President Donald Trump responded that any deal had to be on American terms.
“Another volatile day for the financial markets which saw equity indices lurch from positive to negative as trade war angst overshadowed corporate earnings results and global recession fears have been stoked by the inversion of the yield curve,” was Sucden Financial analysts’ take on things.
Mid-morning, China’s State Council Tariff Committee had said that Beijing “has no choice but to take necessary measures to retaliate” to the latest round of trade tariffs from Washington.
In later remarks, Chinese foreign affairs ministry spokeswoman, Hua Chunying, said Beijing hoped that the US would meet China half way in implementing the consensus reached between the two countries’ leaders at the last G20 summit.
Aagainst that backdrop, as of 1848 BST, the Bloomberg commodity index was dipping by 0.25% to 76.67 as the US dollar spot index edged higher by 0.18% to 98.1600, having trade within one percentage point of its 52-week lows at one point during the session.
Energy futures were again the weakest segment of the market, with front month Brent crude oil futures dropping by 2.57% to $57.95 a barrel on the ICE, alongside a drop of 2.5% to $1.6339 a gallon for gasoline futures on NYMEX, partly due to reports that Gibraltar might release an Iranian oil tanker, the Grace 1, which had been retained by authorities on the Rock on 4 July.
“Oil prices have dropped back as the Gibraltar government releases the Grace 1 tanker despite a last-minute plea from the US government. Hopes are high that this will mean that Tehran will contemplate a reciprocal move regarding the Stena Impero, helping to defuse tensions in the Gulf,” said IG‘s Chris Beauchamp.
“Economic concerns continue to leave oil under pressure too, as GDP forecasts are cut and central banks downgrade their growth forecasts.”
Gold futures on the other hand continued to flicker green, with traders pushing December futures on COMEX up by 0.28% to $1,532.10/oz..
Commenting on the outlook for the yellow metal, UBS‘s Joni Teves raised his target for the average price of gold in 2019 from $1,370/oz. to $1,405/oz., versus a year-to-date average of 1,332/oz..
“We think risks are skewed to the upside; gold could rise to as much as $1580/$1600 over the remainder of the year and we would not rule out a temporary breach of the upper end of that range,” he said.
Three-month LME copper futures meanwhile slipped from $5,770 per metric tonne at the open to $5,751 by the close.
Soft commodities meanwhile were mixed but overall litle changed, with December wheat on the CBoT slipping by 0.57% to $4.7550 a bushel but the similarly-dated corn contract up by 0.2% to $3.7100 a bushel.