Commodity Roundup: Gold up over 1%, natgas futures set for third week of gains

Gold prices (XAUUSD:CUR) on Friday were set for a weekly gain after two-consecutive losses amid speculations of an early rate cut by the U.S. central bank, while U.S. natural gas futures (NG1:COM) got a boost from a smaller-than-expected storage build.

Spot gold (XAUUSD:CUR) gained more than 1% on Friday, set for a 2.3% weekly rise, as higher-than-estimated U.S. jobless claims reinforced bets on policy easing. Traders are currently pricing in about a 67% chance of a rate cut by the U.S. Fed in September, according to the CME’s FedWatch Tool. Lower interest rates reduce the opportunity cost of holding the precious metals, boosting its appeal.

“What we’re seeing is continued impact from the expectations for Fed rate cuts, or when those rate cuts may occur,” said David Meger, director of alternative investments and trading at High Ridge Futures told Reuters.

Turning to the energy market, oil prices were set for a gain this week as cease-fire talks between Israel and Hamas stalled, while natural gas prices were on course for a third straight weekly rise on signs of healthy demand and decline in production.

U.S. natural gas futures (NG1:COM) surged past $2.3/MMBtu, marking their highest level in almost four months.

According to RBC Capital Markets strategists, the latest natgas bullish storage data shows a 79 billion cubic feet (Bcf) injection, which is less than the consensus median expectation of 87 Bcf. This injection figure is also below the five-year average of 81 Bcf, signaling that the supply-demand balance is tightening.

Elsewhere, copper futures (HG1:COM) ticked up on their way to a weekly rise despite the U.S. dollar holding firm.

“A growing supply deficit is likely to worsen if prices don’t rise enough to incentivise new mines,” ANZ Research said in a note, adding that, supply growth is also being hampered by regulatory and geopolitical issues, which are pushing out project timelines.