Commodities: Precious metals overcome dollar strength, despite trade concerns
By Alexander Bueso
Date: Wednesday 29 May 2019
(Sharecast News) - Commodity prices were little changed overall, even as a spate of warnings in China's state-owned press that Beijing might use so-called rare earths as a tool in its trade war with Washington fed into further strength US dollar.
According to analysts at Bank of America-Merrill Lynch, while in fact not so rare, aside from promethium, China held roughly 40% of global supplies, meaning that it had a lot to say regarding at least short-term dynamics in the market for rare earths elements, which were a key input on many high-tech, low carbon and defence products.
More to the point, the flurry of reports was a possible indication of the worsening tensions in the ongoing trade war between the US and China.
As an aside, China had made similar threats earlier in the same decade.
Somewhat conspicuously, precious metals held up fairly well during Wednesday's session, in part perhaps due to simmering tensions in the Middle East, amid reports that the US would send another 900 soldiers to Saudi Arabia and Qatar.
August gold futures on COMEX edged higher by 0.16% to $1,284.50/oz..
Most base metals' prices on the other hand did give back more ground, with three-month copper futures on the LME finishing the session at $5,883 per metric tonne, having started the day of from $5,962.
In the energy patch meanwhile, gasoline and heating oil futures put in moderate losses, but front month West Texas Intermediate dipped by just 0.10% to $59.08 a barrel on NYMEX.
To take note of, after the close of trading in New York, the American Petroleum Institute reported a 5.27m barrel (consensus: -0.9m) drop in US oil inventories for the latest week.
Selling was light in soft commodities, outside of July corn on the CBoT, which surrendered 2.82% to finish at $4.9050 per bushel.
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