* Gold gains as Hong Kong unrest stirs risk aversion
* Oil drops on worse than feared rise in U.S. fuel stocks
* Copper steadies as U.S.-China tensions dampen risk appetite.
Gold prices rose on Thursday as tensions between the United States and China over a Hong Kong security law escalated, while fresh stimulus measures by several economies to mitigate the coronavirus fallout also lent support. On MCX prices were little down in early morning after settling up 0.45 percent yesterday. U.S. Secretary of State Mike Pompeo said Hong Kong no longer qualifies for its special status under the U.S. law, dealing a blow to its status as a financial hub. U.S. President Donald Trump has a long list of possible responses to China's plans to impose a national security law on Hong Kong, including visa and economic sanctions, said David Stilwell, assistant Secretary of State for East Asia. The European Union unveiled a 750 billion euro ($826.13 billion) plan on Wednesday to prop up economies, lifting the demand for safe-haven assets such as gold. Stimulus measures to limit the economic damage have supported gold, which is often considered a hedge against inflation and currency debasement. Japan approved a fresh $1.1 trillion stimulus package. A Federal Reserve report on Wednesday implied that U.S. businesses continued to be hammered into the middle of May. SPDR Gold Trust holdings, the world's largest gold-backed exchange-traded fund, rose 0.2% to 1,119.05 tonnes on Wednesday.
Oil prices fell in early trade on Thursday after U.S. crude, gasoline and heating oil inventories all rose more than expected, dousing hopes of a smooth recovery in demand from coronavirus lockdowns. The decline extended losses from Wednesday on uncertainty about Russia’s commitment to deep oil production cuts in the lead-up to a June 9 meeting of the Organization of the Petroleum Exporting Countries and its allies, dubbed OPEC+. Data from the American Petroleum Institute industry group showed crude stocks rose by 8.7 million barrels in the week to May 22, compared with analysts’ expectations for a draw of 1.9 million barrels. Gasoline stocks rose by 1.1 million barrels, more than 10 times the build analysts had expected, and stocks of diesel and heating oil rose by 6.9 million barrels, nearly four times as much as anticipated. The market will be looking to see if data from the U.S. Energy Information Administration later on Thursday matches API. With WTI holding above $30, OPEC+ will be closely watching to see whether U.S. oil shale oil producers who have breakeven prices in the high $20 and low $30 dollar range step up production.
Copper prices were little changed on Thursday as initial euphoria over economies reopening from the lockdown was dampened by mounting fears that the Sino-U.S. friction could further hobble global business activity. Casting darker shadows over the trade dispute were reports that the United States is preparing to take action against top metals consumer China this week over its plan to impose a national security law on Hong Kong. Earlier in the session, traders cheered prospects of a quick rebound in the global economy as more countries have been re-emerging from coronavirus shutdowns and as more developing COVID-19 vaccines are underway. The London Metal Exchange plans to consult members on whether its rules need to be changed to guard against market abuse and insider trading. Australia’s New Century Resources Ltd said it was in talks with Brazilian miner Vale SA to buy its nickel and cobalt operations in New Caledonia. The global copper market is expected to be in surplus by 285,000 tonnes this year as a result of the coronavirus pandemic, with the overhang rising to 675,000 tonnes in 2021, the International Wrought Copper Council said in a report.
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