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Weaker Chinese data and lack of details regarding Chinese stimulus weighs on markets

Comex Gold is trading steady near $2,675 an ounce as investors grapple with uncertainty regarding the Federal Reserve's interest rate cut trajectory, following a mixed bag of US economic data. The combination of persistent inflation and weaker labor market indicators has contributed to volatility in Treasury markets. Higher interest rates and a stronger dollar generally weigh on gold, which is denominated in US dollars and offers no interest payments. Market expectations for interest rate cuts in the upcoming two Fed meetings have been revised downward by approximately 40 basis points compared to pre-September jobs report estimates. Furthermore, money managers have reduced their bullish gold positions to an eight-week low, as per the latest Commodity Futures Trading Commission data.

WTI Crude Oil experienced a decline below $74 a barrel following China's highly anticipated Finance Ministry briefing on Saturday. The briefing failed to provide new incentives to stimulate consumption in the world's largest oil importer. Despite Beijing's assurances of increased support for the struggling property sector and hints of greater government borrowing, the briefing did not deliver the expected substantial fiscal stimulus that the markets were anticipating.

LME base metals retreated sharply on Monday, after a two-day rally amid China's recent stimulus announcements over the weekend failed to bolster market sentiment due to the lack of specific details regarding the package's size. The government outlined plans to increase borrowing for the property market, provide subsidies to low-income individuals, and inject capital into state banks. Moreover, the absence of a clear timeline and overall funding amount left investors uncertain as market had earlier anticipated a significant fiscal stimulus ranging from 2 to 10 trillion yuan. LME Copper moderately down by 0.40% near $ 9,650 per ton while Aluminium and Lead is down over 1.2%, while Zinc down 2%.

European natural gas continue to trade lower as traders shifted their focus to tepid demand until there’s more clarity on the conflict in the Middle East. Milder weather is spreading across Europe after a brief cold spell and the region is well supplied, boasting gas storage sites that are 95% full at the start of the heating season. Gas usage in the power sector continues to decline, while a recovery in industrial consumption remains distant. Traders are laser-focused on Israel’s response to Iran’s Oct. 1 ballistic missile attack. For gas markets in particular, the concern lies around the risk of a closure to the Strait of Hormuz, a gateway to the Persian Gulf and a key waterway for LNG. (Bloomberg)

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