Weaker Greenback Boosts Demand for Dollar-Denominated Copper, Gold

The weaker U.S. Dollar drove up foreign demand for a few dollar-denominated commodities on Thursday, namely Comex High Grade Copper futures and Comex Gold. Natural gas prices firmed on a favorable storage report and weather-related issues. Dollar-denominated crude oil lost ground as the weaker dollar was not enough to offset supply concerns.

Copper

Copper prices recovered some of the previous day’s loss that was fueled by renewed geopolitical concerns over a possible trade war between the United States and China. President Trump rattled copper traders on Wednesday when he told reporters he was not happy with the outcome of last week’s trade negotiations between the U.S. and China.

July Comex High Grade Copper settled at $3.0960, up 0.0255 or +0.82%.

Helping to boost foreign demand for dollar-denominated copper was a weaker U.S. Dollar. The Greenback was pressured by profit-taking tied to dovish Fed minutes and the dumping of risky assets due to the cancellation of the widely anticipated summit between the United States and North Korea, scheduled for June 12.

Copper may have also been underpinned by expectations of increased demand and a possible supply deficit.

Gold

A weaker U.S. Dollar due to a dip in U.S. Treasury yields and safe haven buying in reaction to geopolitical concerns over U.S.-China relations helped drive up demand for gold on Thursday. Technical factors also contributed to the move with buy stops being triggered over a key resistance level at $1296.20.

June Comex Gold settled at $1304.40, up $13.10 or +1.01%.

Natural Gas

Natural gas advanced for third straight session on Thursday after a government report came in below expectations. The market was also underpinned by weather forecasts calling for hotter weather across most of the country.

July Natural Gas settled at $2.971, up $0.016 or +0.54%.

On Thursday, the U.S. Energy information Administration reported that natural gas in storage in the U.S. increased by 91 billion cubic feet (Bcf) in the week-ended May 18. Traders were looking for a build of 93 billion.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil settled lower on Thursday as traders priced in the possibility of increased production from OPEC for the first time since 2016. This news offset potentially bullish supply disruptions from both Venezuela and Iran.

July WTI crude oil settled at $70.71, down $1.13 or -1.60% and July Brent crude oil closed at $78.79, down $1.01 or -1.28%.

Also worrying bullish crude oil traders was a sustained rise in gasoline inventories just ahead of the Memorial Day holiday in the United States, which typically marks the start of the summer driving season.