Spot gold rose on Tuesday, off the previous day's near four-month lows, as a drop in equities drove safe-haven buying and the U.S. dollar retreated.
The weaker currency makes dollar-denominated commodities less expensive for holders of other currencies, which could subdue demand.
The greenback fell after hitting a four-month high against the Japanese yen on the past fortnight's 25-basis-point rise in 10-year U.S. government bond yields.
Traders awaited a speech from U.S. Federal Reserve Chair Janet Yellen later this week and any signs of tightening of monetary policy from the central bank.
Gold prices are down more than 6 percent from a seven-month high near $1,300 hit in June.
Perceptions that an era of ultra-cheap money is gradually ending have been reinforced by European Central Bank minutes showing policymakers are open to reducing monetary stimulus.
The Bank of Canada is expected to raise rates on Wednesday. Yellen is scheduled to deliver a semiannual monetary policy testimony to lawmakers on Wednesday and Thursday.
We expect gold prices to trade positive on the back of short covering after drop in prices.
Silver gained 1.09 percent at $15.80 per ounce.
We expect silver prices to trade positive on the back of short covering after drop in prices.
Oil prices climbed more than 2.5 percent on Tuesday along with rising heating oil futures on reports showing cuts in U.S. oil production and declines in U.S. crude and European product stockpiles.
U.S. crude stocks plunged almost three times more than forecast in the latest week, while gasoline inventories decreased unexpectedly and distillate stocks built, industry group the American Petroleum Institute said Tuesday.
Crude inventories fell by 8.1 million barrels in the week to July 7 to 495.6 million, compared with analysts' expectations for a decrease of 2.9 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 2 million barrels, API said.
European refineries increased crude oil intake in June, but stocks of oil products, particularly diesel, slid, Euroilstock data showed on Tuesday. In a separate report on Tuesday, EIA projected U.S. crude oil production in 2018 will rise by less than previously expected.
Traders noted Tuesday's crude price declines were mitigated by reports Saudi Arabia exceeded its OPEC production target and notes from banks lowering oil price forecasts for this year and 2018.
OPEC agreed with Russia and some other major exporters to cut output about 1.8 million barrels per day until March 2018. But production elsewhere has risen as OPEC has held back.
We expect crude oil prices to trade positive on the back of short covering after drop in prices.
We expect Natural gas prices to trade sideways on the back of profit booking after sharp up-move in prices.
Copper prices rose on Tuesday after a rapid build-up of inventories that has weighed on the market since late June halted and workers voted to strike at a mine in Chile, raising supply concerns. Stainless steel ingredient nickel also gained after Chinese steel prices reached 3-1/2 year highs, while zinc, used to galvanise steel, rose to its highest level since March.
However, Capital Economics analyst Caroline Bain said growth in China and the United States in the longer term was likely to slow while interest rate rises would strengthen the U.S. dollar, making metals more expensive for holders of other currencies.
Workers at Chile's Zaldivar mine voted to strike after talks with the firm failed. The nearby Centinela mine is also in negotiations over strike action. Together the two mines produced 340,000 tonnes of copper in 2016.
Federal Reserve Chair Janet Yellen will address congress on Wednesday and Thursday, giving clues about the pace of U.S. monetary tightening.
We expect base metal prices likely to trade volatile on the back of mixed fundamentals.
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