Commodity Roundup: Gold firm after record run as markets brace for CPI print

Gold prices held firm on Monday after rising for eight consecutive sessions, and registering their best weekly gain since October last year, as market focus now turns to U.S. CPI data to gauge the pace of the U.S. Federal Reserve rate cut. Spot gold (XAUUSD:CUR) was up +0.13% to $2,180.25 an ounce by 6 am ET.

In the run-up to that print, bullion’s medium-term outlook looks pretty solid, but closer to hand there could be a case for a brief, tactical pause, Bloomberg reports. “In this environment, an in-line CPI figure could be enough to prompt some consolidation given that it would likely buck up the US dollar, dulling gold’s allure. The key then would be the depth and duration of any retracement.”

Gold powered to an all-time high of $2,185.19/oz on Friday and is up about 14% so far this year. However, gold-backed ETF outflows continued, with total gold ETF holdings declining by 6.2t last week, as per ANZ. Central banks remain strong buyers.

“We remain positive on the price of gold for 2024 and continue to recommend it as a portfolio hedge. We expect gold to trend higher to $2,250/oz, but would wait for price setbacks to gain exposure, even if these turn out to be modest and brief,” Solita Marcelli, Chief Investment Officer Americas, UBS Global Wealth Management said.

Turning to energy commodities, natural gas prices were trading in the green, along with both crude benchmarks. Oil prices fell earlier in the session on persistent demand concerns. “Worries over weak demand in China outweighed the extension of supply cuts by OPEC+,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities told Reuters, adding that mixed signs from U.S. jobs data prompted some traders to adjust positions.

“Still, the losses will be capped by increased geopolitical risk, with the possibility that a ceasefire may not be reached in the Hamas-Israel war and that conflict may expand in Russia and its neighbors,” he said.

ANZ’s Daniel Hynes and Brian Martin wrote Europe remains the most impacted region as oil product shipments from Asia have fallen since January. Europe has become more dependent on Asian oil products due to the war in Ukraine. “With OPEC+ extending its voluntary production cut agreement until the end of Q2 2024, this could tighten the market as demand recovers from its seasonal lull.”

Stocks to watch: Nine Energy Service (NINE) +12%, CSI Compressco (CCLP) +8%, Ring Energy (REI) +8%, Origin Agritech (SEED) +11%, 5E Advanced Materials (FEAM) +11%, Ramaco Resources (METC) +8%, Taseko Mines (TGB) +6%, Amplify Energy (AMPY) -18%, Delek Logistics (DKL) -12%, Petroleo Brasileiro S.A. Petrobras ADR (PBR) -12%, Icahn Enterprises (IEP) -8%.

Recent Commodity Price Movements and A look At Some ETFs