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Published on 15/11/2019 12:31:39 PM | Source: Motilal Oswal Securities Ltd

Gold prices fall as U.S.-China trade pact hopes risk appetite - Motilal Oswal

Overview

* Gold prices fall as U.S.-China trade pact hopes risk appetite

* United States is getting close to a trade agreement with China, White House economic adviser Larry Kudlow said, citing what he called very constructive discussions with Beijing

 

Base Metals

Base metals have been trading volatile over the last few days with rallies being capped awaiting US-China impending trade truce. Copper was under pressure as weak manufacturing and investment data from China fuelled concerns about demand in US. Thursday’s data also showed fixed asset investment, grew 5.2% from January-October, the lowest since Reuters’ records began in 1996. China and the United States are holding “in-depth” discussions on a first phase trade agreement, and cancelling tariffs is an important condition to reaching a deal. China’s aluminium production in October fell 0.7% from the previous month. China, churned out 2.88 million tonnes of the metal last month. That was slightly down from 2.9 million tonnes in September and down 1.8% from a year earlier. The JanuaryOctober output for the group of 10 nonferrous metals rose 4.6% YoY at 48.15 million tonnes.

 

Energy

Crude prices fell after surprise build in inventories and new record production in U.S. coming at record of 12.8Mbpd after EIA reported build of 2.2Mbpd compared with expectations for a build of 1.65Mbpd Gasoline inventories rose by 1.9Mbpd while distillate saw drawdown of 2.5Mbpd. Both 2.2Mbpd crude build and 1.9Mbpd gasoline build trumped expectations, especially gasoline, which went reverse to expectations. Losses were limited by forecasts from OPEC for lower-than-expected oil surplus. OPEC did not revise down global oil demand growth estimates this time. Second, cartel slightly revised down its estimates for nonOPEC oil supply growth by 36,000 bpd to 2.17Mbpd. Natural gas prices slided despite a smaller than expected build in natural gas inventories. The weather is expected to become warmer than normal over the next 6-10 and 8-14 days, but over the next 5-days weather over eastern portion of U.S. will remain cooler than normal sustaining gas heating demand.

 

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