Commodity Roundup: Gold down; ING sees indirect impacts from Red Sea attacks on agri

Precious metals ticked lower on Tuesday as the dollar index (DXY) gained an upper hand, with an uptick in the benchmark 10-year U.S. Treasury putting further pressure on non-yielding bullion. Market pricing now reflects around a 70% chance of a Federal Reserve rate cut in March, down from over 80% a week ago, and for the first ECB rate cut to begin in April, with traders having earlier expected March. Spot gold (XAUUSD:CUR) was down -0.67% to $2,040.65.
Investors are also keeping a close eye on fourth quarter corporate results, a raft of political and geopolitical developments, including developments in the Red Sea, Gaza and Ukraine. Meanwhile, Federal Reserve Board Governor Waller's speech on the economic outlook at 1600 GMT, will be closely watched too; markets heartily cheered a shift in his hawkish views in November.
In the energy complex, oil prices rose after posting losses in the previous session, amid continued tensions in the Middle East. "Fresh instability in the Red Sea raised the risk of disruptions to oil trade," ANZ said in a note. European gas futures had fallen to a five-month low amid high inventories and weak demand. "However, this is being offset by stronger renewable power generation. This high level of gas storage facilities is also providing comfort to a market still at risk of supply disruptions" ANZ added.
On the data front, official inventory data from the U.S. Energy Information Administration is expected on Thursday, delayed by one day this week due to the holiday on Monday.
Copper prices in the meantime gained despite a stronger dollar. However, concerns over future demand after top consumer China skipped an expected rate cut prevailed. "Investors need to acknowledge that 2024 could be the first year, since 2020, to witness a synchronized slowdown in most major economies. Bearish bets would rise on metals from funds who want to play the macro slowdown story," said Sandeep Daga, a director at Metal Intelligence Centre, to Reuters.
Elsewhere, soybean, cocoa and wheat futures fell among agriculture commodities. ING Commodities in an article said, agricultural flows are less likely to be significantly disrupted by developments in the Red Sea. Saying that, however, we have been seeing increased volumes of US grain taking the longer route via the Suez Canal and onwards to Asia, rather than through the Panama Canal. "There are also potential indirect impacts from the Red Sea attacks on agri markets. If they persist and lead to increased delays, farmers could see their input costs increasing. This would materialise in the form of higher diesel prices and potentially higher fertiliser prices."

This data comes from MediaIntel.Asia's Media Intelligence and Media Monitoring Platform.