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Morning Commodities-Market updates

GOLD Gold inched higher on Friday as investors judged that a sell-off sparked by a rise in U.S. interest rates this week had run its course and the dollar weakened, making bullion cheaper for holders of other currencies. Gold registered a second weekly loss and has fallen more than 3 percent from a high of $1,295.97 on June 6 as investors braced for the U.S. Federal Reserve to raise interest rates and signal its policy outlook on Wednesday. Bullion is sensitive to higher interest rates because they push bond yields higher, increasing the opportunity cost of holding non yielding gold, and tend to boost the dollar. Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 1.5 percent to 27.4 million ounces in the week to Thursday. Fears of more rate increases this year were heightened on Thursday by strong U.S. economic data, though housing numbers on Friday disappointed, pushing bond yields and the dollar lower. In other precious metals, silver was also down and headed for a weekly decline, its biggest in six weeks.

CRUDE OIL Oil prices edged up on Friday from 2017 lows as some producers cut back on exports, but the market was poised for a fourth week of losses as OPEC-led production cuts failed to allay concerns over global oversupply. Oil prices hit six-month lows on Thursday and have tumbled more than 12 percent from late May when producers led by the Organization of the Petroleum Exporting Countries extended a pledge to cut output by 1.8 million barrels per day (bpd) for six months by another nine more months. Non-OPEC member Russia is expected to export 61.2 million tones of oil via pipeline in the third quarter, equivalent to about 5 million bpd, against 60.5 million tonnes in the second quarter, according to industry sources and Reuters calculations. Kazakhstan, which agreed to cut supplies last year as part of the non-OPEC bloc, said it would reduce production in June and July after overproducing for three months in a row. But OPEC members Nigeria and Libya, which are exempt from the deal, have increased exports as they bounce back from supply disruptions caused by protests, rebel activity and mismanagement. In latest sign of crude glut, ageing supertankers are being used to store unsold oil off Singapore and Malaysia. Rising U.S. crude output has also undermined the impact of OPEC-led cuts, as production has risen more than 10 percent in the past year.

COPPER  Copper steadied on Friday but registered its biggest weekly drop since early May as markets priced in a higher U.S. interest rate environment that would support the dollar. The U.S. Federal Reserve raised interest rates this week and indicated further tightening before yearend, boosting the dollar and making commodities priced in the greenback more expensive for holders of other currencies. Data this week showed China’s economy generally remained on a solid footing in May, but tighter monetary policy, a cooling housing market and slowing investment reinforced views that it will gradually lose momentum in the coming months. China is the world’s largest consumer of copper. Chinese steel futures rose sharply for a third straight session, supported by government efforts to tackle a glut, even as the outlook for demand in the world’s top steel consumer may not be too promising, particularly from its property sector. Nickel this week touched its lowest since June 2016 but is set to end the week barely changed. Aluminum also touched it’s lowest in more than a month during the week. Aluminum witnessed its third straight weekly decline.

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