GOLD - Gold edged higher on Wednesday as the dollar dipped and simmering geopolitical tensions lent support, though the metal was largely unchanged for the month amid an increased chance of a U.S. interest rate rise next month. The dollar edged lower versus a currency basket, with sterling recovering after a poll showed Britain's ruling Conservatives still leading ahead of elections next week. A previous projection indicated a hung parliament. The dollar's losses were limited by U.S. economic data this week that supported the case for a Federal Reserve interest rate hike next month. Higher rates reduce demand for non-interest bearing bullion and boost the U.S. currency, making dollar-priced gold costlier for non-U.S. investors. Some market participants said signs of softness in some economic data have raised questions about whether the U.S. central bank can keep to its plan to hike interest rates two more times this year and begin shrinking its balance sheet. The investigations into alleged Russian meddling in the 2016 U.S. election and Moscow's possible collusion with members of Donald Trump's campaign also have clouded the prospect of a rate hike next month. Investors fear the probes could hamper the Trump administration's push for tax cuts and other stimulus measures.
CRUDE OIL - U.S. oil tumbled nearly 4% on Wednesday, as a Reuters survey showed that OPEC oil output rose in May, the first monthly increase this year. Higher supply from two OPEC states exempt from a production-cutting deal, Nigeria and Libya, offset improved compliance with the accord by others. The data added to concerns over a global supply glut as U.S. shale oil drilling continues to climb. The worries come amid continued uncertainty over whether the recent agreement to extend production cuts will actually manage to reduce global output. OPEC and non-OPEC members agreed to extend production cuts for a period of nine months until March last week, but kept the levels at the 1.8 million barrels per day agreed in November last year, against expectations that the oil cartel was set to announce deeper production cuts. As part of the agreement, Nigeria and Libya will remain exempt from making cuts while Iran would be allowed to retain the right to increase production to the same reference level, around 3.797 million barrels a day, agreed in November last year. Official crude inventories from the Energy Information Administration will also be published one day later than normal on Thursday.
COPPER - Copper prices rose on better-than-expected manufacturing data from China. Growth in China's manufacturing sector in May kept pace with the previous month, an official survey showed on Wednesday, beating expectations in a reassuring sign the world's second-biggest economy is not losing too much steam after a solid first quarter performance. Upbeat China data did little to help nickel, as the metal prices dropped to their lowest close since June 2016. The official Purchasing Managers' Index (PMI) of China stood at 51.2 in May, compared with the previous month's 51.2 and above the 50-point mark that separates growth from contraction on a monthly basis. Copper prices were supported by a drop in on warrant stocks available to the market in LME-registered warehouses, falling to 153,500 tons after 7,625 tons of cancellations. On-warrant stocks have decreased by a third since mid-April. A global aluminum producer has offered Japanese buyers a premium of $123 per ton for July-September primary metal shipments, down 4 percent from the current quarter.
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