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Commodities: Gold and oil lower on profit-taking as North Korea risks persist

26-09-2017 18:43

Safe haven gold eased on Tuesday under pressure from a stronger dollar, as investors looked to book profits ahead of rising North Korean tensions.
The precious metal was 0.75% lower to $1,300/oz. while the December contract was down 0.6% to $1,304/oz..

"Geopolitics haven't come off the table. They are still front and centre but after a rally you tend to get a tiny bit of a pullback," said ETF Securities commodity strategist Nitesh Shah.

Elsewhere, investors are focused on a speech, "Inflation, Uncertainty, and Monetary Policy" by US Federal Reserve Chair Janet Yellen, in Cleveland.

Ahead of Yellen's speech, investors were getting mixed signals from Fed official William Dudley who said the US central bank was on track to gradually raise rates while two other Fed officials expressed the need to stay put on further tightening.

In other precious metals, spot silver was down 1.54% to $16.92/oz., platinum was 1.4% softer at $928/oz. while palladium was 0.63% firmer to $921/oz..

Meanwhile, base metal copper traded 0.71% lower to $6,421/tonne as investors rushed to book profits on a stronger dollar.

"Last week was the third week in a row that speculative financial investors withdrew from copper," said Daniel Briesemann at Commerzbank, adding, "It seems the base metals are losing support from one of the most important factors of the last few months, those speculators."

Profit taking also ensued on oil markets on Tuesday as January WTI traded 0.72% lowerr to $52.41/barrel while benchmark brent crude for January delivery was 0.98% softer at $57.51/barrel, both falling from 26 month highs, thanks to a firmer US dollar.

The sell offs came despite several inflationary factors that include Turkish President Erdogan repeating threats to cut the pipeline carrying 500,000-600,000 barrels per day (bpd) from northern Iraq to the Turkish port of Ceyhan, the OPEC led cut of 1.8 million bpd in production and the Iraqi government voicing intention to hold talks with the Kurdistan Regional Government over the result of their referendum.

"Although there was plenty of price-bullish news making headlines yesterday, undoubtedly the biggest factor was the referendum in the Kurdistan region of Iraq," analysts at Vienna-based JBC Energy said in a note.

The US Energy Information Administration said production from wells in shale formations would rise for a 10th month in a row in October. US shale producers' ability to ramp-up output as later-dated crude prices strengthen will keep price volatility low, said Jeffrey Currie, Goldman Sachs' head of global commodities research.

In the grains market, soybeans for November delivery were down 0.66% to $9.65/bushel, underpinned by a slow pace of farmer sales and limited harvest deliveries, grain merchants said.

December corn went the same way, trading 0.25% lower to $3.53/bushel while New York cotton for December was 0.97% softer at $0.6895/lb..