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Todays Headlines

1. Market Gold Rush

2. Oil Price slips

3. Copper Strong

Gold Continues Record Run with 4% Weekly Gain

In a historic surge, gold prices reached an unprecedented high, briefly surpassing $2,200 for the first time ever and settling at a record $2178.6 per troy ounce. The momentum behind this climb stems from increasing optimism regarding major central banks' plans to slash interest rates in the coming months, coupled with ongoing geopolitical tensions driving high demand.

Market Optimism Fuels Gold Surge

Investors absorbed a plethora of statements from central banks and economic data, particularly Friday's jobs report, which indicated a likelihood of rate cuts in the near future. Despite the U.S. economy adding 275,000 jobs last month—exceeding expectations—revisions to previous figures and a slight rise in unemployment hinted at a cooling market sentiment.

Treasury Yield Drop Boosts Gold Rally

The 2-year Treasury yield, sensitive to Federal Reserve rate adjustments, experienced a 2-basis point drop, further fueling the gold rally. This decline followed the European Central Bank's decision to cut its inflation forecast, prompting speculations of an imminent rate cut possibly as early as June.

Central Banks' Gold Purchases Counter Investor Exodus

Despite some investors exiting the gold market, evidenced by a continued outflow from global gold exchange-traded funds, central banks persist in buying gold as part of their ongoing diversification efforts. Last year, central banks purchased 1,037 tonnes of gold, nearly matching the all-time high seen in 2022, according to data from the World Gold Council.

Anticipating U.S. Inflation Data

Looking ahead, the spotlight remains on gold as upcoming consumer inflation data is anticipated to provide insights into the trajectory of U.S. interest rates. With U.S. Federal Reserve officials deliberating the timing of rate adjustments, Tuesday's inflation figures are poised to shape market expectations.

Oil Prices Slip Amid Chinese Demand Concerns

Oil prices closed 1% lower on Friday, marking a weekly loss as markets remained cautious about soft Chinese demand despite OPEC+ extending supply cuts.

Brent crude futures settled down 88 cents at $82.08 a barrel, while U.S. West Texas Intermediate crude futures (WTI) fell 92 cents to $78.01.

Chinese Demand Woes Continue

China's economic growth target of around 5% for 2024 raised doubts among analysts, who see it as ambitious without substantial stimulus. Despite a rise in crude imports in the first two months of the year compared to 2023, purchases weakened, reflecting a trend of softening demand from the world's top buyer.

OPEC+ Extension Provides Support

OPEC+ members, led by Saudi Arabia and Russia, agreed to prolong voluntary oil output cuts of 2.2 million barrels per day into the second quarter. However, data from Rystad Energy showed an increase in February production over January.

Market Observations and U.S. Trends

U.S. energy firms reduced the number of oil rigs this week, signaling potential future production declines. Market attention shifted to signals on the timing of rate cuts in the U.S. and EU, with lower interest rates potentially boosting oil demand.

Fed and ECB Consider Rate Cuts

Federal Reserve Chair Jerome Powell indicated confidence in falling inflation, hinting at possible rate cuts. Meanwhile, the ECB is anticipated to lower rates between April and June, according to French central bank head Francois Villeroy de Galhau.

Money Managers Increase Long Positions

Money managers raised their net long U.S. crude futures and options positions, as reported by the U.S. Commodity Futures Trading Commission (CFTC).

Copper Surges Amid Rate Cut Expectations and China's Recovery

Copper prices reached a fresh five-week high on Friday, buoyed by optimism surrounding potential U.S. interest rate cuts and anticipated demand recovery in China, the world's leading metals consumer.

Trading at $8,664 per metric ton on the London Metal Exchange, copper rose by 0.3%, touching $8,689, the highest since January 31. Weekly gains amounted to nearly 2%.

Speculation is rife about the possibility of copper mirroring gold's surprise upward surge. The forthcoming U.S. jobs report could serve as a catalyst, especially if it indicates any weakness, according to Ole Hansen, head of commodity strategy at Saxo Bank.

Amidst a range-bound market, speculative interest in copper has remained relatively neutral over time.

Industrial Metals Benefit from Bullish Sentiment

The rally in gold, driven by speculative activity, set a series of record highs during the week. Moreover, broader bullish sentiment bolstered global stocks to hit record levels as investors anticipated transatlantic interest rate cuts in the coming months.

The weakening dollar, experiencing its sharpest weekly decline of the year, contributed to the positive outlook for metals, making them more affordable for buyers using alternative currencies.

Tin, Nickel, and Zinc Register Weekly Gains

LME tin surged 0.4% to $27,720 a ton, the highest since last August, with a weekly gain of 4.7%, as Indonesia witnessed a significant drop in refined tin exports.

Nickel rose 0.9% to a four-month high of $18,140, and zinc climbed 0.7% to a five-week peak of $2,552, both marking the fourth consecutive week of gains.

Supply Concerns Drive Lead and Aluminium

Supply uncertainties fueled by nickel mining quota delays in Indonesia and a zinc smelter output cut in South Korea prompted a jump of 1.5% in LME lead to a one-month high of $2,139 per ton. Aluminium also rose by 0.4% to $2,262.