LME copper falls amid stronger dollar, weak demand

GOLD PRICES MAIN TAINED A BULLISH SENTIMENT at the close of the week’s trading to mark a second consecutive weekly gain as spot gold climbed 0.3 per cent to $1,866.87 per ounce, while U.S gold futures rose 0.3 per cent to $1,868.5 per ounce.

According to analysts, gold has risen as much as $110 since November 3, supported by deepening fears of inflation amid expectations from key central banks that interest rates would remain low.

Commenting on gold’s recent bullish run, Phillip Streible, chief market strategist at Blue Line Futures in Chicago, described the day’s trade as a “corrective day”, noting that traders are taking profits after an incredible run. “Logically,if you are not taking something off the table with a $100 rally,you’d be kind of foolish,” he added.

Remarkably, bullion has also shrugged off strength in the dollar this week contrary to expectations that a stronger dollar would limit demand for bullion among buyers holding other currencies.

Reacting to the precious metal’s resilience , analysts at French multinational investment firm, Societe Generale predicted that gold prices would average $1,950 an ounce in the first quarter of 2022, given the renewed commitment from the Federal Reserve to support the economy.

Adam Koos, president at Libertas Wealth Management Group, was pessimistic on gold’s future, noting that prices are likely to get volatile with headlines related to economic reports and the threat of inflation. “Inflation is a very real fear,and the price of gold is reflecting this,” he said.

For other precious metals, spot silver was up 0.4 per cent at $25.32 per ounce,palladium jumped 2.8 per cent to $2,116.5 per ounce,while platinum slipped 0.2 per cent at $1,083.49 per ounce. stated that their end-season stocks could remain below average.

World sugar production was forecast to rebound, after three years of contraction, but still below the global consumption level.

Meat production is expected to expand, underpinned by a swift

IRON ORE FUTURES PLUNGED TO A FIFTH CONSECUTIVE WEEKLY fall on Friday,as worries over declining demand in China outweighed hopes for an easing of financing curbs in Evergrande Group, the country’s debt-ridden property sector.

The most-traded iron ore for January delivery on China’s Dalian Commodity Exchange was down 1.6 per cent at 546.50 yuan a tonne, posting a weekly loss of nearly 3 per cent.

Traders dealing in the steelingredient traded with caution following a relief rally in China’s ferrous futures markets, spurred by Evergrande’s last-minute coupon payment to some bondholders and talks of a potential credit easing in the property sector.

Despite the company’s potential credit-easing measures, analysts asserted that China will stand firm on policies to curb excess borrowing by property developers even as it makes financing tweaks to help

COPPER PRICES ON THE LONDON MET AL EXCHANGE (LME) plugged into bearish territory at the close of the week’s trading, pressured by a stronger dollar and stifled demand.

Three-month copper on the LME shed 0.2 per cent at $9,614 a tonne. Losses were however cushioned by tight inventories in exchange warehouses while onwarrant LME aluminium stocks fell to 595,825 tonnes, the lowest since December 2005.

The discount of LME cash aluminium over the three-month contract also slipped to $2.80 a tonne, the smallest level since Sept. 1, indicating tightening nearby home buyers and meet demand amid an industry-wide liquidity crunch.

Citing China’s downbeat real estate sector amid the bleak outlook for China’s steel and iron ore demand, steel manufacturing giants ArcelorMittal said it expects a slight contraction in Chinese steel demand in 2021.

Earlier in the week, Fitch Solutions raised speculations about an end to the iron ore price rally, with prices dropping to levels below what the market analyst had previously forecasted.

As a result, the industry research firm has revised down its price forecast from $170/tonne in 2021 and $130/tonne in 2022 to $155/tonne and $110/tonne, respectively.

“While China’s energy crunch supply.

With rate-hike expectations happening alongside the passage of a trillion-dollar U.S. infrastructure bill and tight copper scrap supply, analysts at GF Futures in Hong Kong, advised investors to exercise a wait-and-see approach for copper in the coming days.

Wenyu Yao, analyst at Dutch multinational banking firm, ING Group, opined that concerns over the financial health of China Evergrande , which made a last minute bond payment to avert default, and possible contagion to the rest of the property sector lingered and weighed on copper.

Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen,Denmark asserted has started to ease and production curbs on steel are also being lifted gradually, we do not expect the strong demand impact that had stemmed from stimulus to return in 2022 as construction projects reach completion and the pipeline of new projects lessens, with the Chinese Government focusing on tightening credit lines,” the report stated. that the market is concerned about lack of supplies going forward.

Also, Chinese customers remain reluctant to sign up for 2022 copper supply from Chilean state owned copper mining company, Codelco at the highest premium in seven years due to strong backwardation in the copper market

Meanwhile, the most-traded December copper contract on the Shanghai Futures Exchange (ShFE) was up 0.5 per cent to 70,570 yuan ($11,038.29) a tonne, rising 1.8 per cent on a weekly basis.

For other base metals, LME aluminium was down 0.6 per cent at $2,645 a tonne, nickel shed 0.1 per cent at $19,735 a tonne , while tin was up 0.4 per cent to $37,850 a tonne.