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Spot gold (XAUUSD:CUR) fell 1.5% on Friday following reports that the People’s Bank of China paused their purchases in May after 18 months of continuous buying, while silver shed more than 2% even as the U.S. dollar weakened.
Bullion held by the People’s Bank of China was unchanged at 72.80 million troy ounces in May, according to data released Friday. China is the world’s biggest consumer of the precious metal.
China, a major driver behind gold’s rally in the past year, is nowhere near done buying gold, but the pause also highlights they are balking at the prospect of paying record prices, Saxo Bank’s Ole Hansen said. “Overall, gold is still consolidating, and the news will likely prolong that phase, but overall the long-term bullish outlook has not changed.”
Furthermore, in case of a weak jobs report today, and with that increased focus on U.S. rate cuts, “we could see ETF investors pick up the baton that the PBOC temporarily, in my opinion, has dropped on the floor,” Hansen added.
Turning to base metals, copper’s rally cooled after the May rally. BMI – A Fitch Solutions Company noted that the anticipated decline in the U.S. dollar strength in the second half of the year could provide a tailwind for copper prices. A later Fed cut could, however, limit the extent of price growth for base metals, including copper, in 2024, it added.
Investors also took note of major metals’ buyer China’s economic data. The country’s refined copper imports rose above 500kt despite higher inventories, but concentrate imports dropped 11% y/y, ANZ reported.
Iron ore imports were above 100mt for the third consecutive months. This is despite weaker steel production and a counter-seasonal rise in iron ore inventories, it added. Crude oil imports dropped 9% y/y to 47mt, albeit volumes were higher than last month.
ANZ in a separate note said, Aluminium is likely to outperform other base metals as supply risks worsen.
Insight:
Given China’s pause in gold purchases and the potential impact on prices, investors in the precious metal market may need to closely monitor China’s actions in the coming months to gauge market sentiment and price movements.
Recent Commodity Price Movements and A Look At Some ETFs:
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Energy
- Crude oil (CL1:COM) +0.06% to $75.60.
- Natural Gas (NG1:COM) -0.01% to $2.82.
Metals
Agriculture
- Corn (C_1:COM) -0.42% to $450.09.
- Wheat (W_1:COM) -1.98% to $626.83.
- Soybeans (S_1:COM) -0.61% to $1,193.21.
Commodity ETFs
Gold ETFs:
- SPDR Gold Shares ETF (GLD)
- VanEck Gold Miners ETF (GDX)
- VanEck Junior Gold Miners ETF (GDXJ)
- iShares Gold Trust ETF (IAU)
- Direxion Daily Gold Miners Index Bull 2X Shares ETF (NUGT)
- Sprott Physical Gold Trust (PHYS)
Other Metal ETFs:
- iShares Silver Trust ETF (SLV)
- Sprott Physical Silver Trust (PSLV)
- Global X Silver Miners ETF (SIL)
- U.S. Copper Index Fund, LP ETF (CPER)
- abrdn Physical Palladium Shares ETF (PALL)
Oil ETFs:
- U.S. Oil Fund, LP ETF (USO)
- Invesco DB Oil Fund ETF (DBO)
- U.S. 12 Month Oil Fund, LP ETF (USL)
- U.S. Brent Oil Fund, LP ETF (BNO)
- U.S. Natural Gas Fund, LP ETF (UNG)
- U.S. Gasoline Fund, LP ETF (UGA)
Agriculture ETFs:
- Invesco DB Agriculture Fund ETF (DBA)
- Teucrium Soybean ETF (SOYB)
- Teucrium Wheat ETF (WEAT)
- Teucrium Corn Fund ETF (CORN)
