Copper prices eased last week as the U.S. Dollar strengthened, leading to lower demand for dollar-denominated commodities. Despite the small weekly drop, the market remained underpinned by a bright outlook for demand due to expectations for healthy economic growth.
May Comex High Grade Copper futures settled at $3.2330, down $0.0355 or -1.09%.
Trading volume was light at the start of the week, but this helped contribute to the market’s volatility. The trade began to pick-up slowly after Chinese markets reopened on Thursday following the Lunar New Year holiday, with consumers expected to return to the market in coming weeks to restock ahead of the seasonally strongest second quarter for demand.
Supporting the outlook for copper, China’s scrap metal imports fell to the lowest level in nearly two years in January, as stringent new rules on foreign solid waste imports came into force at the start of the year.
Lower imports of copper scrap are supportive for copper prices because smelters will need to raise their feed of refined copper instead.
Gold
Gold prices tumbled last week, posting its biggest weekly decline in 2 ½ months, as the U.S. Dollar continued to build a support base slightly above three year lows on the back of higher U.S. Treasury yields.
April Comex Gold futures settled the week at $1330.30, down $2.40 or 0.18%.
Gold was pressured throughout the week by rising Treasury yields which hovered near four-year highs. Hawkish Fed minutes supported the benchmark 10-year Treasury Note. Treasury Bond yields were underpinned by the completion of $258 billion in new supply this week, which was the second largest ever over a three-day period. A weak Euro also pressured gold prices.
The minutes of the Fed’s latest rate-setting meeting in late January were released on February 21. They were perceived as hawkish because they emphasized confidence in the need to keep raising interest rates.
Additionally, buying of physical gold was muted in China because of the week-long Lunar New Year holiday which came to an end on Thursday.
Crude Oil
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures closed sharply higher last week after reversing earlier weakness fueled by a stronger U.S. Dollar.
April WTI crude oil settled at $63.55, up $2.00 or +3.25% and April Brent crude oil finished the week at $67.31, up $2.47 or +3.81%.
Helping prices to rebound was data from the Energy Information Administration which showed that U.S. crude inventories unexpectedly fell 1.6 million barrels the week-ending February 16. Crude stocks at the Cushing, Oklahoma, futures delivery hub, fell 2.7 million barrels last week. Traders were looking for a 1.8 million build.