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Gold Prices Gain on Softer Dollar; Focus on US Inflation Data

Gold jewelry is seen displayed for sale at a Chow Tai Fook jewelry store in Shanghai, China November 27, 2023. REUTERS/Nicoco Chan
Gold jewelry is seen displayed for sale at a Chow Tai Fook jewelry store in Shanghai, China November 27, 2023. REUTERS/Nicoco Chan
TT
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Gold Prices Gain on Softer Dollar; Focus on US Inflation Data

Gold jewelry is seen displayed for sale at a Chow Tai Fook jewelry store in Shanghai, China November 27, 2023. REUTERS/Nicoco Chan
Gold jewelry is seen displayed for sale at a Chow Tai Fook jewelry store in Shanghai, China November 27, 2023. REUTERS/Nicoco Chan

Gold prices rose on Tuesday as the dollar softened, while investors awaited a key US inflation report and speeches from Federal Reserve officials for cues into the central bank's potential rate-cut timings.
Spot gold was up 0.4% at $2,038.19 per ounce, as of 0840 GMT. US gold futures rose 0.5% to $2,047.90 per ounce.
The dollar traded weaker, making greenback-priced bullion relatively less expensive for other currency holders.
"Ahead of inflation number we expect some kind of consolidation. We expect gold to trade in a very narrow range ... bias will be 'sell' on jump," said Ajay Kedia, director at Kedia Commodities in Mumbai.
The support for gold follows Japan and the UK entering into a technical recession, a trend reflected in the gold-silver ratio, which is currently at 90 <XAU-XAG>, Kedia said. "But, there is no change in war premium, everything has been already priced in."
Recent remarks from Fed policymakers suggested that the US central bank was in no hurry to cut interest rates, largely cementing bets against any rate cuts before June.
Markets are currently pricing in about 81 basis points of rate cuts for 2024, with a 64% chance of the first quarter-point cut occurring in June, according to LSEG's interest rate probability app, IRPR.
Lower interest rates boost the appeal of holding non-yielding bullion.
At least 10 Fed officials are due to speak this week, while investors are focused on the core personal consumption expenditures price index, the Fed's preferred inflation gauge, due on Thursday.
Investors are also monitoring the risk of US government agency shutdowns if Congress fails to reach an agreement on a borrowing extension by Friday.
Spot platinum climbed 0.8% to $887.04 per ounce, palladium jumped 0.9% to $963.50, and silver rose 0.7% to $22.67 per ounce.

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Ukraine Threatens to Halt Transit of Russian Oil to Europe

A view of storage tanks and pipelines at the Mero central oil tank farm, which moves crude through the Druzhba oil pipeline, near Nelahozeves, Czech Republic, August 10, 2022. REUTERS/David W Cerny/File Photo
A view of storage tanks and pipelines at the Mero central oil tank farm, which moves crude through the Druzhba oil pipeline, near Nelahozeves, Czech Republic, August 10, 2022. REUTERS/David W Cerny/File Photo
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Ukraine Threatens to Halt Transit of Russian Oil to Europe

A view of storage tanks and pipelines at the Mero central oil tank farm, which moves crude through the Druzhba oil pipeline, near Nelahozeves, Czech Republic, August 10, 2022. REUTERS/David W Cerny/File Photo
A view of storage tanks and pipelines at the Mero central oil tank farm, which moves crude through the Druzhba oil pipeline, near Nelahozeves, Czech Republic, August 10, 2022. REUTERS/David W Cerny/File Photo

A top aide to Ukrainian President Volodymyr Zelensky on Friday said Kyiv would halt the transit of Russian oil across its territory at the end of the year, when the current contract expires and is not renewed.

Mykhailo Podolyak said in an interview with the Novini.Live broadcaster that current transit contracts for Russian supplies that run through the end of the year will not be renewed.

“There is no doubt that it will all end on January 1, 2025,” he said.

Kiev says it is prepared to transport gas from the Central Asian countries or Azerbaijan to Europe, but not from Russia, as it is crucial for Ukraine to deprive Russia of its sources of income from the sale of raw materials after it attacked its neighbor well over two years ago.

The contract for the transit of Russian gas through Ukraine to Europe between the state-owned companies Gazprom and Naftogaz ends on December 31.

Despite the launch of Russia's full-scale invasion of Ukraine in February 2022, the Ukrainians have fulfilled the contract terms - in part at the insistence of its European neighbors, especially Hungary.

But the leadership in Kiev has repeatedly made it clear that it wants the shipments to end.

Meanwhile, the Czech Republic energy security envoy Vaclav Bartuska said on Friday that any potential halt in oil supplies via the Druzhba pipeline through Ukraine from Russia from next year would not be a problem for the country.

Responding to a Reuters question – on comments by Ukrainian presidential aide Mykhailo Podolyak that flows of Russian oil may stop from January – Bartuska said Ukraine had also in the past warned of a potential halt.

“This is not the first time, this time maybe they mean it seriously – we shall see,” Bartuska said in a text message. “For the Czech Republic, it is not a problem.”

To end partial dependency on the Druzhba pipeline, Czech state-owned pipeline operator MERO has been investing in raising the capacity of the TAL pipeline from Italy to Germany, which connects to the IKL pipeline supplying the Czech Republic.

From next year, the increased capacity would be sufficient for the total needs of the country’s two refineries, owned by Poland’s Orlen, of up to 8 million tons of crude per year.

MERO has said it planned to achieve the country’s independence from Russian oil from the start of 2025, although the TAL upgrade would be finished by June 2025.

On Friday, oil prices stabilized, heading for a weekly increase, as disruptions in Libyan production and Iraq’s plans to curb output raised concerns about supply.

Meanwhile, data showing that the US economy grew faster than initially estimated eased recession fears.

However, signs of weakening demand, particularly in China, capped gains.

Brent crude futures for October delivery, which expire on Friday, fell by 7 cents, or 0.09%, to $79.87 per barrel. The more actively traded November contract rose 5 cents, or 0.06%, to $78.87.

US West Texas Intermediate (WTI) crude futures added 6 cents, or 0.08%, to $75.97 per barrel.

The day before, both benchmarks had risen by more than $1, and so far this week, they have gained 1.1% and 1.6%, respectively.

Additionally, a drop in Libyan exports and the prospect of lower Iraqi crude production in September are expected to help keep the oil market undersupplied.

Over half of Libya’s oil production, around 700,000 barrels per day (bpd), was halted on Thursday, and exports were suspended at several ports due to a standoff between rival political factions.

Elsewhere, Iraq plans to reduce oil output in September as part of a plan to compensate for producing over the quota agreed with the Organization of the Petroleum Exporting Countries and its allies, a source with direct knowledge of the matter told Reuters on Thursday.

Iraq, which produced 4.25 million bpd in July, will cut output to between 3.85 million and 3.9 million bpd next month, the source said.