Commodities Round-up: Gold futures hammered as Trump inauguration nears

Gold futures took a hammering on Thursday (19 January) ahead of Donald Trump's inauguration, as the 45<sup>th US president, with the dollar strengthening against a basket of global currencies.

At 5:12pm GMT, the Comex gold futures contract for February delivery was down 1.11% or $13.40 at $1,199.00 an ounce, while spot gold was 0.37% or $4.45 lower at $1,199.85 an ounce, sliding from highs seen earlier in the week.

Overnight, US Federal Reserve chair Janet Yellen signalled further rate rises. In a speech in San Francisco, Yellen noted she and her colleagues expect the central bank to raise interest rates "a few times a year" until 2019.

"It is fair to say the [US] economy is near maximum employment and inflation is moving toward our goal."

Elsewhere, Comex silver also slid 2.25% or 39 cents at $16.89 an ounce, and spot platinum fell 0.88% or $8.44 to $954.90 an ounce. However, palladium continues defy market direction notching up another 0.36% or $2.73 rise to $751.92 an ounce, up 10% in the year to date, atop a 20% rise in 2016.

Away from the precious metals market, oil futures recovered marginally from overnight declines. At 5:48pm GMT, the Brent front month futures contract was up 0.37% or 20 cents at $54.12 per barrel, while the West Texas Intermediate (WTI) was 0.23% or 12 cents higher at $51.20 per barrel.

Overnight market sentiment was fed by the US Energy Information Administration's (EIA) observation that the country's shale producers were on course to snap a three-month decline in February, as energy firms hedge a higher oil price and boost drilling activity in light of $50-plus prices.

According to the statistics agency's latest projections, February production will edge up 40,750 barrels per day (bpd) to 4.748 million bpd, reversing an earlier forecast of 5,900 bpd decline.

Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB, said: "What also became very clear from the EIA report is that US shale oil production is on the verge of breaking higher. When US shale oil production peaked in March 2015, at 5.46 million barrels per day, it started to head downwards as if the line had been broken off. This was no soft turnaround.

"In fact, it was abrupt as new production broke below the running losses in already existing US shale oil production each month. To some degree this is now likely to happen in reverse. The rise in newly initiated shale oil production is now about to break straight up through the level of gradually declining legacy losses. As such, the net increase in production – which has headed downwards in a pretty straight line since March 2015 – is now likely going to head upwards in a fairly straight line instead."