COMMODITY FUNDAMENTAL NEWS UPDATE

Precious metals are likely to open flat and trading is likely to be subdued ahead of key central bank decisions today. The ECB policy will be keenly awaited for clues about the fate of its asset purchases. Gold and silver have found support in recent days as the dollar fell to 10-month lows after the Trump administration failed to repeal Obamacare and that has cast doubts on his economic agenda. The dollar was already under pressure from last week following weaker inflation and retail sales data in June. The probability of a December rate hike is down to 43% from 50% a few days ago. On the ETF side, SPDR holdings continue to see outflows and gold holdings are down over 30 tonnes so far this month. From a trading perspective, gold and silver could see range bound trading ahead of the ECB meeting. A dovish policy could lead to dollar rebound and weigh on precious metals.

LME copper has been trading firm and near it’s highest since early March. Unionized workers at mines in Peru, started nationwide strike on Wednesday to protest the governments proposed labor reforms. Nickel is trading at 3 month high, with premiums having surged by 16% this week to reach their highest in two years at $200- $220/ton. Demand surged after China's import arbitrage turned positive this week. 

Crude oil prices are likely to find support as EIA reported surprise decline in US inventories across the board. US crude oil stocks fell by 4.7 million barrels last week. Gasoline stocks also fell sharply by 4.45 million barrels while distillate stocks fell by 2.1 million barrels.