Commodity Roundup: Gold on course for small weekly gain; oil set to break winning run

Gold prices edged lower for a second consecutive session on Friday, pressured by a firmer U.S. dollar index (DXY), but were headed for a small weekly gain amid persistent geopolitical tensions. Spot gold (XAUUSD:CUR) was down slightly at $2,023.02 an ounce by 6 am ET.

On the economic data front, US weekly jobless claims came in better than expected; however, minutes from the last FOMC meeting showed policymakers are in no rush to cut interest rates. Safe haven buying remains supportive amid instability in Ukraine and the Middle East, ANZ noted. “Gold clings to $2,000 despite unwinding interest rate expectations, but high rates will undermine gold’s performance relative to cash and bonds,” Icon Economics’ Stuart Allsopp wrote.

On the energy side, oil prices were on course to snap a two-week winning run after the U.S. central bank indicated interest rate cuts could be delayed by at least two more months. Both benchmarks are on track to end the week lower, after two straight weeks of gains.

Federal Reserve Governor Christopher Waller said Thursday he will need “at least another couple more months” of data before inflation is falling enough to warrant interest rate cuts. Higher interest rates for longer could slow economic growth, which could curb oil demand in the world’s largest oil consumer.

Crude oil futures closed higher Thursday, after the U.S. reported a smaller than expected weekly increase in domestic crude inventories, while U.S. natural gas turned lower a day after its biggest percentage gain since July 2022. Oil markets continue to battle between geopolitical concerns and fundamentals, but “deep refinery maintenance rolling on from the U.S. into Europe and then China in the coming months means if it weren’t for geopolitical tensions, prices would be lower,” Kpler analyst Matt Smith said.

In the base metals space, copper prices ticked lower but headed for a second-straight week of gains as fresh support for Chinese markets helped boost sentiment. As per ANZ analysts, copper’s fundamentals continue to beat expectations, and an inflection point in central bank monetary policies is starting to boost sentiment. Shanghai nickel extended gains on Friday to a three-month peak, supported by concerns over Indonesian ore supply and a potential U.S. sanction on Russian metal, Reuters reported. The most-traded March nickel contract on the Shanghai Futures Exchange advanced 4.1% to 135,220 yuan ($18,792.04) per metric ton, its highest since Nov. 20.

Elsewhere, among agriculture commodities, soybean and wheat futures rose, while cocoa fell. According to ING, the Environment Protection Agency in the US has approved the sale of E15 (15% ethanol) gasoline for the full year in eight Midwest states. The new sales rules will be implemented in April 2025 to provide time for refiners to make the necessary adjustments.