U.S. Dollar Profit-Taking Gives Gold Some Breathing Room

The soft U.S. consumer inflation report, slight drop in Treasury yields and weakness in the U.S. Dollar helped create some breathing space in the commodity and stock market on Thursday for a few oversold and rangebound markets.

Copper

In addition to the weaker U.S. Dollar, which tends to make dollar-denominated assets like copper a more attractive asset, prices rose on Thursday on falling inventories and signs of strong demand in top consumer China.

At the London Metal Exchange-registered warehouses, copper stocks dropped by another 7,950 tonnes to 285,075 tonnes. They have fallen more than 100,000 tonnes since March 27.

Additionally, China imported 442,000 tonnes of unwrought copper in April, according to customs data released this week, the highest monthly total so far in 2018.

Gold

Gold was helped by the drop in the U.S. Dollar which made it a more attractive assets. Rising geopolitical tensions in the Middle East were also supportive.

Investors continued to react positively to Tuesday’s decision by President Trump to withdraw from an international nuclear accord with Iran, raising the risk of conflict in the Middle East and increasing the appeal of safe-haven assets such as gold.

In other news, North American gold-backed exchange-traded funds registered inflows in April at their highest level since September 2017, with safe-haven purchases ushered in by a trade stand-off between the United States and China, Syria tensions and worries about possible U.S. sanctions on Russia.

Additionally, shortly after Trump’s announcement on the U.S. withdrawal from the Iran nuclear deal, Israel said on Thursday that it had attacked nearly all of Iran’s military infrastructure in Syria after Tehran fired rockets at Israeli-held territory for the first time.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil prices finished slightly better on Thursday as investors weighed the potential disruption to oil flows from major exporter Iran in the face of U.S. sanctions.

Buyers also continued to react to concerns about Venezuela’s crude production as well as economic turmoil in the country. Additionally, this week’s U.S. government inventories report also showed a bigger-than-expected drawdown in U.S. crude inventories.

Natural Gas

Natural gas prices rose on Thursday after the U.S. Energy Information Administration reported that domestic supplies of natural gas rose less-than-expected. According to the EIA, supply rose by 89 billion cubic feet for the week-ended May 4, lower than the 92 billion forecast by analysts at S&P Global Platts.