Gold Prices Up As China Central bank Pumps Up Liquidity, Prices Data Stable - Gold prices rose in Asia on Friday with the Chinese New Year next week expected to stoke some physical demand as the People's Bank of China released nearly CNY 2 trillion in extra liquidity on a day when prices data came in stable and other key gold buyer India witnessing a pickup on a lower tax rate for the yellow metal. Overnight, gold prices edged lower on Thursday, reaching their lowest level in around a month as the dollar firmed amid expectations of more U.S. interest rate hikes this year. Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Copper extended its downtrend after
another big rise of inventories highlighted the market currently has healthy
supplies - Copper
extended its downtrend after another big rise of inventories highlighted the
market currently has healthy supplies. On-warrant copper inventories in
warehouses certified by the London Metal Exchange - those not earmarked for
delivery - jumped by 25,700 tonnes on Thursday and have surged by 75 percent
over the past three weeks. That showed that a 12 percent rally in LME prices in
December was not supported by the underlying fundamentals. China’s unwrought
copper imports fell for a second straight month in January as winter
restrictions on the construction sector and high domestic production rates
continued to crimp demand for metal from overseas. Traders were likely to
import more copper cathode to China given uncertainty over smelter feed supply
as new restrictions on China’s scrap imports come into force. The December
production jump defied curbs imposed on the operations of northern Chinese
smelters.
Oil falls for sixth day as supply
fears mount - Oil
prices fell for a sixth day on Friday after Iran announced plans to boost
production and U.S. crude output hit record highs, adding to concerns about a
sharp rise in global supplies. The falls come amid a rout in global share
markets as inflation fears grip investors.Both contracts have fallen more than
9 percent from this year's high point in late January. "Bets on further
rising oil and metals prices, for example by hedge funds, have climbed to
excessively bullish levels," said Carsten Menke, commodities research
analyst at Swiss Bank Julius Baer.At that level, U.S. production would overtake
current output in Saudi Arabia, the biggest producer in the Organization of the
Petroleum Exporting Countries.OPEC and other producers, including Russia, have
cut production since January 2017 to force down global inventories, but these
cuts have been offset by rising U.S. oil production.
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