COMMODITY MARKET UPDATE - 31 Aug 2016

PRECIOUS METAL

Gold prices drifted lower in Asia on Wednesday with expectations growing for a Fed rate hike by the end of the year. Gold for December delivery on the Comex division of the New York Mercantile Exchange fell 0.09% to $1,315.25 a troy ounce. Overnight, gold prices faced pressure during North American hours on Tuesday.

Market players are also looking ahead to Friday’s nonfarm payrolls report for further hints on the timing of the next U.S. rate hike. The consensus forecast is that the data will show jobs growth of 180,000 in August, following an increase of 255,000 in the preceding month.

BASE METAL

LME copper is expected to move between USD 4,600-4,635/mt on Wednesday and SHFE 1610 copper to range at RMB 36,100-36,350/mt.

Eurozone and regional unemployment and inflation, ADP employment for the US and July pending home sales are due for release today. The US dollar index strengthened overnight, while crude oil weakened. Base metals continued to diverge.

Inflation rates in Italy, eurozone and France are expected to improve, but will still remain low. In this context, the European Central Bank may continue to expand its easy monetary measures in the near future.

ENERGY

Crude held weaker in Asia on Wednesday after U.S. industry estimates showed a build in stockpiles last week furthering concerns about global oversupply.

Crude oil for October delivery on the New York Mercantile Exchange fell 0.17% to $46.27 a barrel. The American Petroleum Institute said crude oil stockpiles rose 940,000 barrels at the end of last week and gasoline supplies dropped 1.6 million barrels as the summer driving season nears a close.

Oil's losses on Monday came as a broadly stronger U.S. dollar, fading hopes of a production freeze and concerns about additional output from the Middle East and Africa weighed on sentiment.

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