Commodity Roundup: Gold dips as focus shifts to Powell, oil rises on supply woes

Gold prices (XAUUSD:CUR) ticked lower on Tuesday, pressured by a firmer U.S. dollar index (DXY), while oil prices edged up on hopes of better demand during summer and rising geopolitical tensions.

A strong dollar causes the gold price to rise in other currencies, leading to selling pressure, while higher interest rates increase the opportunity cost of holding non-yielding bullion.

Market participants are in wait-and-watch mode ahead of key U.S. economic data releases this week, along with comments from Federal Reserve Chair Jerome Powell. Investors are, however, gradually building gold ETF holdings as prices consolidate, ANZ analysts said.

According to Deutsche Bank Research, while the surge in large-cap technology stocks (COMP:IND) (XLK) has been in the spotlight, it was silver (XAGUSD:CUR) that generated the strongest return among global assets during the first half of 2024.

Silver climbed 22.5% during the first six months of the year, outperforming the 18.6% total return on the Nasdaq Composite (COMP:IND) and the 15.3% return on the S&P 500 (SP500)(SPY)(IVV), said Jim Reid, Deutsche Bank’s global head of macro research and thematic strategy, in a Monday note.

Copper prices meanwhile rebounded to $9,656/t. An 8,000t withdrawal from inventories in South Korea outweighed the impact of contracting manufacturing activity in China. “Market sentiment was bolstered by retreating SHFE copper inventories, which boosted confidence of improving demand in H2 2024,” the brokerage added.

In the energy market, oil prices (CL1:COM) (CO1:COM) extended their gains after rising to a two-month high on Monday on hopes of rising demand during the Northern Hemisphere’s summer driving season and ongoing supply worries.

“The Israel-Hamas conflict continues to escalate and increases the risk of oil supply disruptions. Recent reports also suggest that the record-breaking Hurricane Beryl is intensifying and raising the chances of flooding rains and storm surges, which could hit oil operations in the Gulf of Mexico later this week. This has also raised concerns over a severe hurricane season that is yet to come,” ING reported.

“Meanwhile, the prompt time spreads for both ICE Brent and NYMEX WTI continue to trade in backwardation, suggesting concerns over tightness in the market in the short term.”

Potentially relevant stocks: Vivakor (VIVK), Natural Resource Partners (NRP), Tamboran Resources (TBN), Peabody Energy (BTU), Consol Energy (CEIX), Clean Energy Fuels (CLNE).

Recent Commodity Price Movements and A look At Some ETFs