Gold Prices Fall In Asia As Chinese New Year Holidays
Start - Gold dipped in Asia on Thursday as
top buyer China started a market break through Feb. 21 to mark the Lunar New
Year and physical trade dipped further with Hong Kong also shut and Singapore
on holidays Friday and Monday. Overnight, gold prices rose sharply amid dollar
weakness as data showing rising inflation and falling retail sales stoked
stagflation fears as market participants questioned the underlying strength of
inflation. Rising inflation and falling retail sales pointing to possible
sluggishness in consumer spending, leading some market participants to slash
their bullish expectations for first quarter economic growth as JPMorgan
(NYSE:JPM) revised down its first quarter US GDP forecast to 2.5% from 3%.
Zinc prices gained as stronger than expected inflation in the United
States spurred buying - Zinc
on MCX settled up 2.62% at 229.55 as stronger than expected inflation in the
United States spurred buying. An environmental crackdown in China has hit
supplies of metals and fuelled a price rally that shows no sign of losing steam
any time soon. The Yangtze River delta region near Shanghai saw a key measure
of smog concentrations rise by a fifth in January. Some regions of China could
suffer heavy pollution because of fireworks and unfavorable weather conditions
during Lunar New Year celebrations, despite a ban on firecrackers in more than
400 cities, the Ministry of Environmental Protection warned.
Copper prices rose as traders took up new positions in the metal before
the ShFE closes for a national holiday - Copper on MCX settled up 1.82% at 457.55 on
fresh buying as support seen after Shanghai copper prices rose registering
their biggest daily leap since October, as traders took up new positions in the
metal before the Shanghai Futures Exchange closed for a national holiday.
Market open interest on Shanghai copper hit 811,170 lots on Tuesday, the
highest since January 2016, ahead of the Lunar New Year holiday in China beginning
on Thursday. Traders were likely covering their short positions ahead of the
week-long holiday, which could put them at some risk due to volatility in LME
prices.
Oil extends gains on Saudi commitment to cut, weak dollar - Oil prices on Thursday extended gains from the
previous session, pushed up by a weak dollar and by comments from Saudi Arabia
that it would rather see an undersupplied market than end a deal with OPEC and
Russia to withhold production.Prices rose on the back of ongoing weakness in the
U.S.-dollar against other leading currencies, further supported by rising stock
markets, traders said. A weaker greenback potentially supports consumption of
dollar-denominated commodities as it makes fuel and raw materials cheaper for
countries using other currencies. "On commodity markets, everyone loves a
lower U.S. dollar," said Greg McKenna, chief market strategist at futures
brokerage AxiTrader.
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