GOLD – Gold prices edged higher in European trade on Monday, extending last week’s strong gains on bets that lackluster U.S. data will keep the Federal Reserve cautious about the future pace of policy tightening. Futures traders are pricing in less than a 40% chance of a rate hike by the end of the year, according to Investing.com’s Fed Rate Monitor Tool, down from around 50% a week earlier. The dollar index fell to its lowest since September in overnight trade, before bouncing back modestly. Economic reports will remain important in the week ahead as market players gauge the strength of the world’s largest economy and how it will impact the Federal Reserve’s view on monetary policy. This week’s calendar features data on the U.S. housing sector, as well as surveys on manufacturing conditions in the Philadelphia and New York regions and weekly jobless claims. The Fed hiked rates at its June meeting and stuck to its forecast for one more rate hike this year, but the subdued inflation outlook has since raised doubts over whether the U.S. central bank will be able to stick to its planned tightening path. The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.
CRUDE OIL – Oil prices were slightly higher in European trade on Monday, extending last week’s strong gains on signs that demand for crude will pick up during the second half of 2017. In May, OPEC and some non-OPEC producers extended a deal to cut 1.8 million barrels per day in supply until March 2018. So far, the production-cut agreement has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya and Nigeria. OPEC member Kuwait said on Friday it would be premature to cap Nigerian and Libyan oil production as the two African countries’ output needed to stabilize further. A ministerial committee from OPEC and non-OPEC countries, which is headed by Gulf OPEC member Kuwait, will meet in Russia on July 24 to discuss compliance with the cuts. In the week ahead, market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer. Meanwhile, traders will also continue to pay close attention to comments from global oil producers for evidence that they are complying with their agreement to reduce output this year.
ALUMINIUM – Massive aluminum capacity cuts might trigger oversupply in alumina market in the short term and thus put downward pressure on alumina prices, SMM expects. Tug-of-War between Australian Alumina Suppliers and Chinese Buyers, SMM Reports. Weiqiao Group cut aluminum capacity by 480,000 tones last week, and it is said Shandong will slash aluminum capacity by 2 million tones. The government may take a tougher attitude toward capacity cuts than expected, boding ill for alumina market, SMM explained.
NICKEL – Last week, SHFE 1709 nickel increased for four days in a row from July 11. “Nickel market is estimated to hover at highs this week on falling inventory in China’s market and positive technical indicators,” SMM nickel analyst says. LEAD – Primary lead smelters produced normally last week, except Henan Yuguang Gold & Lead which was still under unit maintenance. Lead Prices to Face Downward Pressure This Week, SMM Forecasts. Secondary lead smelters in Anhui halved output because of high temperature except Anhui Huanyu Lead Industry Group which kept halting output. Large secondary lead smelters in Henan, Shandong and Jiangxi posted stable production, while small smelters in those regions shut down amid environmental protection inspections.
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