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Gold retreats after strong rally, await U.S. Data this week

Comex Gold futures retreated sharply by about 2% to begin the week to trade near $2,670 per ounce, reversing the significant gains from the previous week. Despite a weaker US dollar, which usually supports gold, investors' focus shifted towards the upcoming Federal Reserve interest rate decision. A recent report indicating stronger-than-expected US economic activity has reduced expectations for a rate cut in the near future. Higher interest rates typically dampen gold's appeal as a non-interest-bearing asset.

WTI Crude Oil dipped below $71 per barrel as US Treasury Secretary nominee Scott Bessent advocated for increased domestic oil production while Israel indicated that a potential ceasefire agreement with Lebanon's Hezbollah could be imminent. President-elect Donald Trump to push for an additional 3 million barrels per day of oil production, significantly increasing its current output of 13 million barrels per day. This potential surge in US production could exacerbate an anticipated global oil glut, especially considering OPEC's upcoming decision on whether to increase production. Given these factors, market predict OPEC will delay its planned production increase for the third time.

LME base metal trading higher today ending a two-day losing streak, as the US dollar weakened following President-elect Donald Trump’s nomination of Scott Bessent for Treasury Secretary. Investors anticipate that Bessent will favor policies that maintain economic stability and market equilibrium over more disruptive reforms. Meanwhile, global attention is on China's attempts to revitalize its economy following its recent stimulus package. However, China's decision to maintain key lending rates has dampened hopes for economic stimulus, potentially impacting copper consumption. Simultaneously, global copper inventories are shrinking due to rising demand. LME copper is trading 1% higher at $9,050 per ton while Aluminium, Zone and Lead is up by about 0.8% today.

European natural gas trading mostly sideways on Monday as traders weighed the potential impact of colder weather forecasts on the region's gas inventories. It decline 2.7% on Friday, but remain up significantly for the month. Despite a mild start to the week, temperatures are expected to decrease in the coming days, potentially accelerating gas withdrawals from storage sites. While storage levels remain relatively high at 88%, faster consumption could strain supplies during late winter and the upcoming summer replenishment period.

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