Gold prices reclaimed US$1,250/oz mark, helped by weak greenback upside in yellow metal is also attracting speculative interest, with CFTC reporting that non-commercials have hiked their net long positions on COMEX Gold for the first time in six weeks. However, funds and money managers seem not to be that optimistic on silver, with net short positions at a 2 year high on COMEX. Looking forward, we sense that political uncertainty in US and looming deadline on debt ceiling will continue to augment the safe haven appetite. In addition, Trump’s inability to push any pro-growth reforms poses a serious threat to the ongoing reflation trade/buoyancy in global equity markets.
Base metals traded on a stable note, with copper particularly underpinned by supply side issues. In this regard, labourers and management at Antofagasta mine in Chile failed to reach a wage deal, with now government intervening into the negotiations next week. Nevertheless, most of the metal markets remain in a comfortable contango, indicating abundant near term supply in a comfortable contango, indicating abundant near term supply situation.
Oil futures pared gains, after energy consultancy firm Petro-Logistics reported estimates that OPEC production would rise by 145,000bpd to above 33mbpd in July. Markets are now keeping an eye on the scheduled meeting today between OPEC and non-OPEC officials in order to gauge the prospects of deeper production cuts given the cartel’s failure to facilitate sustainable recovery in prices.