Gold struggles near 3-week lows amid Fed March rate hike bets - 8 Mar 2017

Commodity Intraday Tips

Gold struggles near 3-week lows amid Fed March rate hike bets.
Gold prices struggled near three-week lows during European morning hours on Tuesday, amid growing expectations among traders that the Federal Reserve will raise interest rates at its March policy meeting next week. Comex gold futures were steady at $1,225.35 a troy ounce by 3:20AM. The precious metal fell to $1,223.00 on Friday, the lowest since February 15. Futures traders are pricing in around a 90% chance of a hike at the Fed's March 14-15 meeting, according to’s Fed Rate Monitor Tool.Odds of a second rate hike in September currently stand at 67%, while a third hike in December is priced in at 53%, aligning market expectations with the Fed's current forecast for three rate hikes in 2017. The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced. Investors are now waiting for further clues on the likely pace of hikes, with all eyes on this week's U.S. jobs report.

LME Copper to Move Lower.
LME copper will trade at USD 5,750-5810/mt on Wednesday and SHFE 1704 copper will move at RMB 47,00047,500/mt. Attention should be on US’s EIA and API crude oil inventories from the week ending March 3, China’s February import & export and US’s February ADP employment on Wednesday. Base metals remained weak both on LME and SHFE markets on Tuesday’s night trading. Nickel, which was resistant to drop, declined while aluminum strengthened. Base metals are expected to remain weak on Wednesday.
China’s import & export will keep rising in February, according to increasing new export orders and new orders of official and Caixin manufacturing PMIs. Moreover, China’s foreign exchange reserves rose to RMB 3 trillion in February, raising market positive sentiment. US’s ADP employment is expected to drop in February from January’s level. However, as initial jobless claim was below 300,000 for 104 week in a row and employment index of ISM nonmanufacturing PMI was higher than previous level in February, a possible rise in ADP employment should not be ruled out completely. US’s API crude oil released on Wednesday morning increased 11.6 million bbls to 529.6 million bbl from the week ending March, accelerating decline of COMEX 1704 oil.

Crude prices fall on U.S. stocks build.
Oil futures fell in Asian trade on Wednesday after industry data pointed to a potential ninth straight week of inventory builds, renewing concerns about an oversupply of oil despite output curbs by OPEC and non-OPEC members.
"Oil is range-bound. If prices dip below $50 a barrel OPEC will cut more; if it goes above $55 the U.S. will produce more," said Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney.

"The market is caught in this middle range. It's difficult to forecast the news that will eventually see a break-out."
The stocks data came as the EIA on Tuesday cut its 2017 world oil demand growth forecast by 110,000 barrels per day to 1.51 million bpd. The same time, members of an OPEC-led production agreement said on Tuesday total output reductions are more than 1.5 million barrels per day and are meeting their expectations.

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