Gold prices fell in Asia as investors exercise caution on expectations of Fed rate

PRECIOUS METALS

Gold prices fell in Asia as investors exercise caution on expectations of Fed rate hikes next year and a likely stronger dollar. On the Comex division of the New York Mercantile Exchange, gold for January delivery fell 0.23% to $1,140.05 a troy ounce. Silver futures dipped 0.13% to $16.068 a troy ounce. On Tuesday as the Bank of Japan held steady as expected and signaled a slight uptick in the economy. Earlier, the Reserve Bank of Australia on Tuesday in the minutes of its latest board meeting said it is ready to lower the cash rate again, if needed, by assessing the benefits of lower interest rates with potential risks to household balance sheets.

BASE METALS

LME copper is expected to range between USD 5,450-5,550/mt during Asian trading hours on Tuesday and SHFE 1702 copper will move at RMB 44,500-45,200/mt. In China’s domestic market, spot copper should trade at discounts of RMB 280-150/mt on Tuesday. Attention should be on Bank of Japan (BOJ)’s interest rate decision in December’s meeting on Tuesday and BOJ President Kuroda’s speech. Eyes should be also on Germany’s PPI in November on an annual basis on Tuesday, a light calendar day. Base metals dropped across the board both on LME and SHFE markets on Monday’s night trading with most of them falling sharply. Almost all SHFE lead contracts dipped to their daily downward limits on Tuesday. However, most metals stopped falling and rallied at the tail of Monday’s night trading. Base metals will likely see some corrections on Tuesday but any rebound will be limited.

ENERGIES

Crude oil prices drifted weaker on Tuesday as investors booked profits on recent gains led by plans for OPEC and non-OPEC producers to trim output by nearly 1.8 million barrels per day (bpd) and cast an eye on U.S. shale producers. On the New York Mercantile Exchange crude futures for February delivery fell 0.17% to $52.97 a barrel. Overnight, crude prices fell as U.S. oil output is poised to grow as American energy companies last week continued to add oil rigs, extending a seven-month drilling comeback enough to replace planned output cuts by OPEC, Russia, and other producers early next year. Implied U.S. output increases...will offset a significant portion of the planned OPEC production cuts especially since we don't anticipate sustained strong compliance," Jim Ritterbusch, president of the noted Chicagobased energy advisory firm Ritterbusch & Associates, said in a research memo to investors.

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