The Fed Alone Can't Make Gold Sparkle in 2024 -- Commodities Roundup

MARKET MOVEMENTS:

-- Brent crude oil is up 0.7% at $77.67 a barrel.

-- European benchmark gas is down 1.2% to EUR33.28 a megawatt-hour.

-- Gold futures are down 0.3% at $2,077 a troy ounce.

-- LME three-month copper futures are down 0.1% at $8,608.50 a metric ton.

-- Wheat futures are up 0.2% to $6.33 a bushel.

TOP STORY:

The Fed Alone Can't Make Gold Sparkle in 2024

On the fifth day of Christmas my true love sent to me: five gold rings, which turned out to be much more expensive than a year ago. The key investment question is whether they will be worth even more by the time next Christmas comes around.

New York gold futures traded around $2077 an ounce Friday, meaning that the precious metal is up 14% year to date and is set to finish the year near the record close of $2081.90 reached Wednesday. This snaps a two-year losing streak.

Many Wall Street analysts believe that, despite big gains in 2023, the stage is set for gold to keep glistening next year. Central banks across the developed world are expected to start lowering borrowing costs in the first half of 2024, reversing part of their aggressive policy tightening since 2022.

Federal Reserve Chairman Jerome Powell seems particularly likely to pivot soon, given that inflation in the U.S. has cooled fast. Derivatives markets price in a 79% chance of rates there being at least 1 1/2 percentage points lower in a year's time.

OTHER STORIES:

A Fracker Tries to Produce 'Guilt-Free' Gas

A shale driller is out to prove that it is possible to go completely green-while still producing natural gas.

Denver-based BKV says that by the 2030s it will store millions of tons of climate-warming carbon dioxide in wells deep underground to eliminate or offset all of the emissions generated from manufacturing and using its gas.

The idea is that consumers can buy that gas and use it without contributing to climate change, says Christopher Kalnin, BKV's chief executive: "We called it...guilt-free energy."

BKV isn't alone. Companies such as Exxon Mobil and Chevron are pouring billions of dollars into businesses aimed at capturing and storing carbon emissions-arguing that such efforts go a long way toward neutralizing the greenhouse gases generated by their products.

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Biden Again Extends Tariff Suspension for EU Steel, Aluminum Imports

The Biden Administration extended the suspension of tariffs on steel and aluminum articles imported by European Union members by two years.

The government on Thursday said the U.S. and the European Union have made substantial progress to identify the sources of non-market excess capacity to address distortions resulting from it.

"These discussions are anticipated to include alternative measures to prevent imports of steel from the EU from threatening the national security of the United States," Biden said in a White House statement.

MARKET TALKS:

Palm Oil Prices Rise Amid Last-Minute Buying

1010 GMT - Palm oil prices closed higher after last-minute buying ahead of the long weekend break, said David Ng, a trader at Kuala Lumpur-based proprietary trading company Iceberg X. Weak production data and the current flood situation in the east coast of Malaysia supported prices, Ng said. He sees support for CPO futures at MYR3,600 and resistance at MYR3,850. The Bursa Malaysia Derivatives contract for March delivery closed MYR5 higher at MYR3,744 a ton. ([e-mail]; @ivy_jiahuihuang)

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Metals Mixed on Final Trading Day of the Year

0839 GMT - Metal prices are mixed on Friday, with thin trading during the festive period not sending a signal one way or the other. Three-month copper is up 0.3% to $8,642 a metric ton while aluminum is 0.7% higher at $2,382.50 a ton. Gold, meanwhile, is down 0.1% to $2,081.70 a troy ounce. Metals have had a volatile year, with gold hitting a new record high, while shifts in demand have pushed and pulled base metals both sharply up and down. Overall, copper is set to end the year just over 3% higher, while aluminum is roughly flat. Gold is up 14%, reflecting the stellar run the precious metal has had this year. ([e-mail])

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Oil Inches Higher But Set to End the Year 10% Lower

0834 GMT - Oil prices move higher Friday, but are still set for a weekly decline as demand concerns hit key benchmarks. Brent crude is up 0.7% to $77.72 a barrel while WTI is 0.6% higher at $72.20 a barrel. Despite the move higher, prices over the week are still set to fall 1.4% and 1.8% for Brent and WTI, respectively. Brent and WTI are both also set to end the year roughly 10% lower, as slow economic growth slashes demand for oil. ([e-mail])

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Iron Ore Prices Fall Amid Strong Supply

0247 GMT - Iron ore prices are lower in early Asian trading amid strong supply and weak demand, Nanhua Futures analysts write in a note. As the year-end approaches, iron ore miners are hoping to hit the annual production goal, the analysts add. Strong inventories of iron ore are also putting pressure on prices, the analysts say. The most-traded iron ore contract on the Dalian Commodity Exchange falls 0.8% to CNY968.0 a ton. ([e-mail]; @ivy_jiahuihuang)

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(END) Dow Jones Newswires

12-29-23 0723ET