Ripples Advisory News Update's: Commodity Tips Commodity Tips

Gold holds near 4-month low as rate-cut hopes dwindle

Spot gold was unchanged at $1,270.71 per ounce as of 0139 GMT, having fallen to $1,265.85, its lowest since end-December, in the previous session

Gold steadied near a four-month low on Friday, as comments from U.S. Federal Reserve Chairman Jerome Powell reduced expectations of a near-term rate cut, putting bullion on track for a weekly fall.

FUNDAMENTALS

- Spot gold was unchanged at $1,270.71 per ounce as of 0139 GMT, having fallen to $1,265.85, its lowest since end-December, in the previous session.

- Spot gold has fallen 1.2 percent so far this week.

U.S. gold futures were steady at $1,271.70 an ounce.

- The dollar looked set to end the week with a firmer tone on Friday as markets scaled back bets on a U.S. rate cut, though much depends on what jobs data due later in the session says about the health of the economy and wages.

- A stronger dollar makes gold costlier for holders of other currencies.

- Asian share markets were subdued on Friday amid thin holiday trade as investors pared expectations for a U.S. rate cut this year.

- On Wednesday the U.S. Fed held interest rates steady with Chairman Jerome Powell further stating there was no need for any readjustment in prices anytime soon and that inflation risks were based on transitory factors.

- U.S. worker productivity increased at its fastest pace in more than four years in the first quarter, depressing labor costs and suggesting inflation could remain benign for a while.

- A slowing global economy, stock market turmoil, delays to interest rate rises and potential U.S. dollar weakness in future are expected to boost average annual gold prices to their highest since 2013, a Reuters poll found.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.16 percent to 745.52 tonnes on Thursday from 746.69 tonnes on Wednesday.

- The total unmatured swap purchase amount will be 100 tonnes in the Turkish central bank's new lira-for-gold swap market, according to a letter it sent to lenders, bankers told Reuters on Thursday.

- Harmony Gold Mining's Nine-Month Total Gold Production Increased By 29 Pct To 33,673 kg.

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Brent crude oil futures were at $70.56 per barrel at 0127 GMT, down 19 cents, or 0.3 percent, from their last close.

Oil prices slipped on Friday, extending a steep fall from the previous session on surging U.S. output and an expected supply increase from producer club OPEC and putting crude on track for the second week of declines.

Brent crude oil futures were at $70.56 per barrel at 0127 GMT, down 19 cents, or 0.3 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 7 cents, at $61.74 per barrel. Both crude futures lost almost 3 percent in value the previous session.

"Oil prices have fallen as the pressure of record U.S. output levels continues to weigh," said Mihir Kapadia, chief executive officer of Sun Global Investments.

U.S. crude oil production reached a record 12.3 million barrels per day (bpd) last week, rising by around 2 million bpd over the past year. U.S. crude exports broke through 3 million bpd for the first time this year, according to data from the Energy Information Administration.

Analysts say U.S. supply will rise further as its export infrastructure is improved.

"One of the things that we can see in the near future is the de-bottlenecking of the Permian basin in the U.S. through new pipelines and export capacity. This will connect the world's largest shale basin to the global oil market," said Will Hobbs, chief investment officer for Barclays Investment Solutions.

Rising U.S. oil production has helped offset some of the disruptions from U.S. sanctions against Iran and Venezuela, and from supply cuts led by the Middle East-dominated producer club of the Organization of the Petroleum Exporting Countries (OPEC), which started in January.

Despite these disruptions and sharp oil price rises in the first months of this year, some analysts say the long-term price risk to crude oil is skewed to the downside.

Erik Norland, the senior economist at commodity derivative exchange CME Group, said "the 130 percent rise in U.S. production due to the shale oil revolution" during the past decade had created a strong and constant downside risk to oil prices, which was visible in exchange trading positions.

"Observers of the oil markets might be surprised to discover that during the past decade, out-of-the-money (OTM) put options were more expensive than OTM calls 92.5 percent of the time for crude oil," he said.

"In other words, oil traders have spent much more time during the past decade worried about downside risks than prices heading higher," Norland added.

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