Commodity Roundup: Gold prices risk a pullback, ING says; Fed speakers in focus

Gold prices (XAUUSD:CUR) eased on Monday after rising 2.5% last week, as reduced Fed rate cut bets weighed on the precious metal, while oil prices gained as traders monitored the demand-supply situation.

Recent hawkish remarks from U.S. central bank officials and speculation that the Fed might delay its easing plans have diminished non-yielding gold’s appeal. Financial markets now expect the U.S. central bank to start its easing cycle in September.

“We expect gold prices to come down slightly from its current levels this quarter as the Fed continues its cautious approach and with geopolitics already being factored into the current price,” ING analysts said in a recent note.

The brokerage expects prices to average $2,250/oz in the second quarter and an annual average of $2,218/oz in 2024. It sees prices peaking in the fourth quarter, averaging $2,300/oz, on the assumption that the Fed starts cutting rates in the second half of the year and the dollar (DXY) and yields weaken.

Cleveland Federal Reserve Bank President Loretta Mester will participate in a discussion today, which will be closely watched by investors, ahead of the U.S. producer price index and consumer price index data due this week, both of which could significantly impact gold and silver prices.

Turning to the energy market, oil prices rose after settling about $1 lower on Friday as Fed officials debated whether U.S. interest rates are high enough to bring inflation back to 2%, while focus also remained on concerns of supply disruptions from the Israel-Gaza conflict.

Meanwhile, Iraq, the second-largest OPEC producer, is committed to voluntary oil production cuts agreed by OPEC and is keen to cooperate with member countries on efforts to achieve more stability in global oil markets, its oil minister told the state news agency on Sunday.

“A rebound in crude oil prices faltered late in the week (last week) amid signs of weak demand. U.S. gasoline and distillate inventories rose last week ahead of the start of the US driving season. This offset a fall in crude oil inventories,” ANZ Research said in a note. Expectations of further constraints on OPEC output were also supportive, analysts added. The group is due to meet in June to discuss their supply policy.