There is no stopping gold’s rally as prices on COMEX breached the $3,900-per-ounce mark on Wednesday.
Increasing safe-haven demand, coupled with expectations of further interest rate cuts by the US Federal Reserve continue to fuel the rallies in both gold and silver.
Meanwhile, oil prices extended losses from the past couple of days as the Organization of the Petroleum Exporting Countries and allies are all set to once again raise crude production next month.
Copper prices remained largely flat, supported by concerns of supply risks.
Gold continues flight
Gold prices reached a new record high on Wednesday, driven by increased safe-haven demand.
This surge was primarily due to the shutdown of most US government operations and the growing anticipation of a Federal Reserve rate cut later this month, both of which enhanced the metal’s attractiveness to investors.
Gold prices on COMEX hit a record high of $3,922.67 per ounce earlier in the day.
The dollar index experienced a 0.2% decline against other currencies, reaching its lowest point in over a week.
This made gold, priced in US dollars, more economical for international purchasers.
“The dollar’s retreat, along with concerns over the US government shutdown, saw buyers emerge,” said David Morrison, senior market analyst at Trade Nation.
The daily MACD is looking even more overbought now. But shorter timeframes suggest that there still may be some room to the upside.
A deadlock between Congress and the White House over a funding agreement has resulted in a significant shutdown of US government operations, potentially jeopardising thousands of federal positions.
The release of critical economic data, such as Friday’s non-farm payrolls (NFP) report, may be postponed due to the shutdown.
Meanwhile, silver prices on COMEX were up 1.8% at $47.475 per ounce.
Oil extend losses
Oil prices slipped again on Wednesday as concerns about oversupply gripped the market.
OPEC+ may boost oil production by as much as 500,000 barrels per day (bpd) in November, three times the October increase, according to a Reuters report. This move comes as Saudi Arabia aims to regain market share.
OPEC, however, refuted media reports on X that suggested a plan to increase output by 500,000 bpd, calling them misleading.
Meanwhile, Russia announced on Tuesday a partial ban on diesel exports and an extension of its gasoline export ban until year-end. This decision comes amid recent attacks on Russian energy infrastructure from Ukraine.
According to American Petroleum Institute estimates, US crude stockpiles decreased in the week ending September 26, while gasoline and distillate inventories increased.
A significant portion of US government operations ceased on Wednesday due to an inability of Congress and the White House to agree on a funding deal.
This partisan stalemate, government agencies have cautioned, will lead to various disruptions, including the postponement of the eagerly anticipated September employment report.
Concerns about fuel demand were heightened by data on Asian factory activity in September, which showed manufacturing activity contracting across most major economies.
Asia is the world’s largest oil-consuming region.
At the time of writing, the price of West Texas Intermediate crude oil was at $61.93 per barrel, down 0.7% from the previous close.
Brent was at $65.56 a barrel, also down 0.7%.
Copper rises
Copper prices rose on Wednesday buoyed by ongoing supply concerns.
A recent mudslide at the Grasberg mine has exacerbated the supply outlook, removing 3% of global mine supply.
Early projections suggest the mine won’t reach full capacity again until early 2027.
Consequently, Freeport-McMoRan has revised its sales guidance for the upcoming year downwards by 35%.
“Coupled with China’s crackdown on excess competition and overcapacity the market expects a large reduction in refined copper,” Neil Welsh, head of metals at FCA regulated multi-asset brokerage Britannia Global Markets, said in an emailed commentary.
Meanwhile, Jefferies analyst Christopher LaFemina views Alcoa’s decision to close its Kwinana alumina refinery in Western Australia as a strategically sound move.
He said:
But it is also an expensive exit from this business.
At the time of writing, the three-month copper contract on the London Metal Exchange was at $10,323 per ton, up 0.2%.
The post Commodity wrap: gold surges to new highs as oil extends losses and copper rises appeared first on Invezz
