Gold prices held onto gains early on Thursday after the U.S. Federal Reserve left interest rates unchanged on Wednesday - 2 Nov 2017

Gold prices held onto gains early on Thursday after the U.S. Federal Reserve left interest rates unchanged on Wednesday, and as investors awaited an announcement on a new chair for the central bank later in the day. The Federal Reserve kept interest rates unchanged on Wednesday and pointed to solid U.S. economic growth and a strengthening labour market while playing down the impact of recent hurricanes, a sign it is on track to lift borrowing costs again in December. Trump plans to nominate current Fed Governor Jerome Powell as the next chair of the U.S. central bank, a source familiar with the matter said on Wednesday. Rising expectations that President Trump will tap Powell, who is seen as more dovish on interest rates, have pressured U.S. Treasury yields and the dollar this week. The U.S. economy unexpectedly maintained a brisk pace of growth in the third quarter as an increase in inventory investment and a smaller trade deficit offset a hurricane-related slowdown in consumer spending and a decline in construction. The ADP national employment report for October that was released Wednesday morning showed a rise of 235,000. The number was expected to be up 190,000. The upbeat ADP report did back gold prices down a few dollars from its overnight high. 

Oil prices were steady in see-saw trade on Wednesday, hitting their highest since mid-2015 and then retreating after U.S. government data showed that the latest weekly draw in domestic crude stocks was not as big as an industry trade group had reported. The U.S. Energy Information Administration (EIA) said U.S. crude stocks decreased by 2.4 million barrels during the week of Oct. 27. That exceeded the 1.8 million barrel draw forecast but fell well short of the 5.1 million barrel decline reported late on Tuesday by the American Petroleum Institute. Brent futures were down 16 cents, or 0.3 percent, at $60.78, while U.S. West Texas Intermediate crude was down 3 cents, or 0.1 percent at $54.35. Before EIA reported the inventory data, Brent was trading at its highest since July 2015 on data showing OPEC had significantly improved compliance with its pledged supply cuts and Russia was widely expected to keep to the deal. Brent’s session high was $61.70, it’s highest since July 2015, and WTI rose as high as $55.22, putting it within a couple cents of its highest since July 2015. OPEC’s October output fell by 80,000 bpd to 32.78 million bpd. Adherence to its pledged supply curbs rose to 92 percent from September’s 86 percent. It is expected that Russia to stick to its agreement to curb oil output by 300,000 bpd from 11.247 million bpd reached in October 2016. Both Brent and U.S. crude notched strong monthly gains in October. 

Nickel prices rocketed nearly six percent on Wednesday to two-year highs on growing expectations of strong demand from manufacturers of rechargeable lithium-ion batteries used to power electric vehicles. Benchmark nickel on the London Metal Exchange traded up 3.2 percent at $12,690 a tonne in official rings from an earlier $13,030, its highest since June 2015. Prices of the metal used mostly to make stainless steel are up around 30 percent so far this year. The subject of electric cars is right now not just playing into cobalt and lithium, but also more into nickel, which is considered a laggard among the metals most likely to benefit. Nickel futures on ShFE hit their daily limit, which under the Shanghai bourse’s trading rules is 99,340 yuan a tonne, the highest in nearly 11 months. In other news, Philippines’ environment minister last week said he was hopeful a ban on open-pit mining would be lifted before year-end, enabling the world’s top nickel exporter to lift shipments. Stocks of nickel in LME  warehouses at around 381,000 tonnes account for nearly 20 percent of global consumption. However, cancelled warrants - metal earmarked for delivery - at 37 percent have fuelled worries about a tight market.

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