Gold Eases In Asia After China Consumer Prices Come In A tad Weaker Than Seen - Gold prices fell in Asia on Wednesday as weaker than expected consumer inflation in China last month gave some pause to views on global inflation rising more than expected in 2018.Overnight, gold prices continued to ease from multi-month highs amid a revival in the dollar as investors weighed the prospect of global monetary policy tightening after the Bank of Japan trimmed its bond purchases. Gold prices retreated further from four-month highs on Tuesday as treasury yields surged, supporting dollar strength amid growing expectations for global monetary policy tightening after the Bank of Japan’s cut its purchases of long-term bonds. In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to other interest-bearing assets such as bonds. Also supporting the dollar strength was a drop in safe-haven demand as global equity markets continued to top multi-year highs amid ongoing risk-on sentiment.
Analysis: LME zinc price sees risks ahead - SMM believes the LME zinc price may stay on its current upward-moving track with historical low inventory and demand from the reconstruction activities in the US. However, we also see irrational factors supporting the price rise and potential risks ahead. With stronger LME zinc price but a weaker SHFE contract, there is limited room for marginal supply to go lower whereas demand sees downside due to deleveraging exercises among businesses and governments. A correction in LME zinc price may be the way to go when the spread normalises.
Copper prices pared gains on profit booking tracking losses in LME prices as the U.S. dollar seen supported - Copper on MCX settled down -0.02% at 453.75 prices dropped as traded book profit tracking Comex copper prices which weakened although the complex remains well supported due to positive Chinese and US data released over the past few weeks. China’s producer price index (PPI) in December rose 4.9% from the same month a year ago, higher than the expectation at 4.8%. The growth in December, however, was lower than the 5.8% seen in November. The country’s consumer price index (CPI), on the other hand, rose 1.8% in December, below the expectation at 1.9%. But this is higher than the growth in November at 1.7%. China tightens restrictions on imports of foreign waste, Chinese metal recyclers and even smelters like Jiangxi Copper Co are increasingly looking to use Southeast Asian countries as an alternative location for the processing of copper scrap. As hopes for synchronised economic growth in the year ahead rise, there is a brighter outlook for industrial demand for base metals. That will be one of the main reasons why copper will continue to shine, according to Bank of America Merril Lynch. It has introduced a $7,700 a tonne price target on copper for the middle of 2018.
Oil prices hit highest since 2014, but analysts warn of overheated market - Oil prices hit their highest levels since 2014 on Wednesday due to ongoing production cuts led by OPEC as well as healthy demand, although analysts cautioned that markets may be overheating. A broad global market rally, including stocks, has also been fuelling investment into crude oil futures. [MKTS/GLOB] "The extension of the OPEC agreement ... and declining inventories are all helping to drive the price higher," said William O'Loughlin, investment analyst at Australia's Rivkin Securities. In an effort to prop up prices, the Organization of the Petroleum Exporting Countries (OPEC) together with Russia and a group of other producers last November extended an output cut deal that was due to expire in March this year to cover all of 2018. The cuts, which have mostly targeted Europe and North America, were aimed at reducing a global supply overhang that had dogged oil markets since 2014.
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