Gold prices are set to end a nine-week winning streak on Friday as the yellow metal declined nearly 2%.
Silver prices also fell, giving up all of its gains from the previous session as the decline continued to be more dramatic than gold.
Meanwhile, oil prices climbed for the second consecutive trading day on Friday as concerns over lower supply from Russia spooked traders.
Base metal markets have shown mixed trends recently.
Aluminum and zinc prices have rebounded, while copper and nickel are trading at slightly lower levels than two weeks ago.
Gold and silver drop
Gold and silver prices declined sharply on Friday on easing tensions between the US and China, and profit booking by investors.
At the time of writing, the December gold contract on COMEX was at $4,102.14 per ounce, down 1.1%, while the silver contract was down 1.3% at $48.090 per ounce.
This year, gold prices have surged by 55%, primarily due to geopolitical instability, substantial central bank purchases, and anticipated interest rate reductions in the US.
Gold, after reaching an all-time high of $4,381 earlier this week, has since retracted to approximately $4,050 earlier on Friday.
“Despite this, there are some signs that it may be trying to consolidate,” said David Morrison, senior market analyst at Trade Nation.
While the daily MACD has decreased from Monday’s severely overbought levels, it is still high, according to Morrison.
This leaves the door open for another test of support around $4,000. Yet there’s still an opportunity for buyers to increase their exposure at better prices than were available over the past week.
Silver also experienced a downturn this morning, erasing Thursday’s modest gains and then some.
The metal has seen an even more significant sell-off from its recent record highs compared to gold, with a high-to-low pullback resulting in a 13% loss.
This fall meets the accepted definition of a correction, which is a decline of 10% or more from recent highs, Morrison said.
Oil climbs on supply fears
Oil prices rose on Friday, continuing the previous day’s significant increase and heading for a weekly gain.
This surge was driven by concerns about supply due to US sanctions imposed on Russia’s two largest oil companies, following the war in Ukraine.
At the time of writing, the price of West Texas Intermediate crude was at $61.92 per barrel, up 0.3%, while Brent was at $66.23 per barrel, up 0.4%.
Following the sanctions announcement, both benchmarks surged over 5% on Thursday, positioning them for an approximate 7% weekly gain, their most significant since mid-June.
This week, six-month spreads for Brent and US crude futures have reverted to backwardation, a state where contracts for later loading are priced lower than those for earlier loading.
This briefly followed a period of contango.
This shift suggests a change in trader concerns from oversupply to undersupply.
Consequently, traders are now able to sell at higher near-month prices, eliminating the need to pay for oil storage for future sale.
The Trump administration has levied new sanctions on Russia’s largest oil companies, Rosneft and Lukoil, citing Russia’s “lack of commitment” to ending the war in Ukraine.
The US is also pressuring India to cease Russian oil purchases, imposing a 50% tariff on Indian imports.
This tariff could be reduced to approximately 15% if India complies with President Trump’s request. India is actively working to reduce its reliance on Russian oil supplies.
Base metals
The three-month copper contract on the London Metal Exchange was up 0.6% at $10,903 per ton, while aluminium was 0.4% lower at $2,852.55 per ton.
Copper continues to face challenges in breaking past the $11,000 threshold.
Traders are consolidating their positions after a strong rally, which was fueled by supply disruptions and renewed optimism regarding the demand outlook.
“Market sentiment remains generally positive, but participants are showing caution ahead of next week’s Federal Reserve meeting, which could add fresh direction to metals and currency markets,” Neil Welsh, head of metals at FCA regulated multi-asset brokerage Britannia Global Markets, said in an emailed commentary.
Meanwhile, lower and continually decreasing LME zinc inventories have recently led to a rapid increase in spot prices, which is the primary concern for zinc.
“In the case of aluminium, a combination of production outages (in Iceland), more optimistic demand prospects in the wake of strong Chinese aluminium imports, and falling inventories on the LME came together,” Thu Lan Nguyen, head of FX and commodity research at Commerzbank AG, said in a report.
Stronger price increases on the futures market are likely to be prevented primarily by the prospect of rising metal exports from China, as Chinese smelters have recently indicated.
Metal production remained high in September, as per statistics office data, while the domestic economy shows signs of weakness.
This suggests that the development of LME inventories will likely be a strong focus in the coming weeks.
“Should there be signs of stabilisation or even a turnaround here, this would dampen zinc and aluminium prices,” Nguyen said.
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