GOLD - Gold steadied on Thursday as a weaker dollar and lower U.S. yields lent support, with investors wagering that policy tightening in the United States would be glacial at best, though gains were capped by surging global stock markets. The dollar was steady against a currency basket, having fallen to its lowest since last October after U.S. Federal Reserve Chair Janet Yellen struck a less hawkish than the expected tone in testimony before Congress on Wednesday. A weaker U.S. currency makes dollar-priced gold cheaper for non-U.S. investors. Denting gold's safe-haven appeal, however, the MSCI world index hit a record high for the fourth time in less than a month as investors took Yellen's remarks as a green light for risk taking. The U.S. economy is healthy enough for the Fed to raise interest rates, though low inflation and a low neutral rate could leave the central bank with diminished leeway, Yellen said on Wednesday. The comments, part of her two-day monetary policy testimony, prompted a rally in treasuries, with yields on two-year notes falling to three-week lows. Lower yields reduce the opportunity cost of holding non-yielding bullion. Interestingly, the
gold/silver ratio is approaching 80, meaning that silver is very inexpensive compared with gold and is a particularly good bargain.
CRUDE OIL - Oil prices rose after much stronger demand in China overshadowed a downbeat report by the International Energy Agency (IEA) that showed higher production by key OPEC exporters. Prices had responded only minimally to data Wednesday showing that U.S. crude oil inventories dropped last week by the most in 10 months. Oil prices have dropped in recent weeks to levels not seen since the end of last year as investors lost faith in a deal between OPEC and non-OPEC producers to reduce output, while U.S. shale oil production has risen sharply. But there is evidence world oil demand is picking up, notably in the United States and China, the world's two biggest oil consumers. China imported 8.55 million barrels per day (bpd) of oil in the first half of this year, up 13.8 percent on the same period in 2016, making it the world's biggest crude importer ahead of the United States. Rising demand is helping to drain a global fuel glut but a rebalancing of the market is taking longer than anticipated. The IEA said the oil market could stay oversupplied for longer than expected due to rising production and limited output cuts by some members of the Organization of the Petroleum Exporting Countries. OPEC said on Wednesday the world would need only 32.2 million bpd of its crude next year, down 60,000 bpd from this year and about 400,000 bpd less than it pumped in June.
ALUMINIUM - Aluminum rose as concerns over potential supply curbs in number one producer China sparked a rally in the metal. Talk that more capacity cuts were on the way in China fed into broader-based concerns over slowing output to push prices higher, analysts said. An industry association said last month that China will launch a crackdown to curb the illegal expansion of aluminum capacity. London Metal Exchange warehouse inventories hit their lowest since 2008 this week. Aluminum stocks in LME warehouses fell another 6,525 tons, data on Thursday showed, taking them back towards this week near a nine-year low. Russian aluminum giant Rusal expects the global aluminum deficit to widen to between 1.7 million tonnes and 1.8 million tonnes in 2018 from 1.3 million tonnes in 2017, Deputy Chief Executive Oleg Mukhamedshin said. The dollar steadied and world shares hit their fourth all-time high in less than a month, while a rally in bonds stalled on fresh talk that the European Central Bank will start winding down its money-printing programme. China's imports of copper and copper products for June were unchanged with May at 390,000 tonnes, according to Reuters calculations based on official data, reflecting a decline in refined imports this year.
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