Gold recovered from lows to after the United States said it would expel 60 Russian diplomats, prompting investor flight into assets considered safe havens - Gold on MCX settled down -0.02% at 30902 recovered from the early losses as investors eyed trade tensions between the U.S. and China and their impact on the U.S. dollar and stock market. Prices for the metal found support as the dollar declined, but a rebound in U.S. stocks on the back of easing trade tensions between the U.S. and China kept a cap on the metal’s gains. Traders are eyeing on the fresh development from China and the U.S. “have quietly started negotiating” to improve U.S. access to Chinese markets. China reportedly considered the U.S.’s requests seeking a reduction of Chinese tariffs on U.S. automobiles, more Chinese purchases of U.S. semiconductors and greater access to China's financial sector by American companies.
Copper slid weighed down by a sharp rise in stockpiles and simmering concerns over the outlook for U.S.-China trade relations - Copper on MCX settled down -1.08% at 428.70 on fresh selling and tracking LME Copper which was down by 1.7 percent to settled down at $6,548 a tonne, touched a low of $6,532, its weakest since early December weighed down by a sharp rise in stockpiles and simmering concerns over the outlook for US-China trade relations. On-warrant stocks have nearly doubled this year and are now at their most elevated since September 2016. Also open interest in LME copper fell to its lowest in more than two years last week. In Shanghai, however, open interest has jumped since mid-January to three-year highs, suggesting large short positions have been building in China.
Impact of China's proposed tariff on US aluminium scrap remains to be seen - China’s Ministry of Commerce has proposed to levy a 25% tariff on aluminium scrap imports from the US in a bid to offset the losses brought by the US tariffs on Chinese steel and aluminium products. While the move may increase procurement costs for Chinese secondary aluminium plants given that 30% of China’s aluminium scrap imports come from the US, SMM believes it is still early to make such conclusion. More negotiations are likely to take place between the two countries before the tariffs come into effect, when keen sellers may look to lower their offers.
Oil Prices Rise Amid Middle East Tension, Strong Shanghai Crude Oil Futures - Oil prices rose on Tuesday morning in Asia, lifted by concerns that tensions in the Middle East could disrupt oil supplies. Meanwhile, China’s new crude futures kicked off to a roaring start.Escalating concerns that the U.S will reimpose sanctions on Iran, which would severely limit Tehran’s ability to export crude oil, have pushed up oil prices. Further supporting oil markets is Saudi Arabia’s push for production curbs led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to be extended into 2019, in an effort to prop up oil prices. Iraq, the second biggest producer within OPEC, said on Monday that it also supports the agreement to cut oil output. However, such a move could face opposition given the relentless increase in U.S. crude production.
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