Commodities Round-up: Gold surges as Trump's immigration row escalates

Jittery investors continued to seek the safety of precious metals on Tuesday (31 January) triggering a surge in bets on gold, after a row in the wake of a selective immigration ban on seven majority Muslim countries by US President Donald Trump escalated.

Overnight Trump fired acting US Attorney General Sally Yates hours after she spoke out against his executive order that placed a temporary ban on refugees and people from Iran, Iraq, Syria, Sudan, Libya, Yemen and Somalia. The dollar subsequently endured its worst session in nine months thereby triggering a gold rush.

At 3:15pm GMT, the Comex gold futures contract for April delivery was up 1.66% or $19.80 at $1,215.80 an ounce, while spot gold was 1.48% or $17.71 higher at $1,213.41 an ounce, after inching closer the psychologically important $1,200-level overnight, as Bloomberg's generic pricing outfit said gold was set for its strongest month since the UK's decision to leave the European Union in June.

FXTM's vice president of market research Jameel Ahmad said gold should be the main beneficiary of Trump's antics, especially as the dollar continues to weaken. "What needs to be taken into account with the [upcoming] US interest rate decision [on Wednesday] is that the Federal Reserve is likely to highlight the area of uncertainty over the America's fiscal direction following Trump's inauguration.

"This might be seen as a minor issue now, but if Trump is not able to deliver on fiscal intentions and instead continues to isolate the US from globalisation, it does risk the Fed needing to keep US interest rate policy unchanged for longer."

Elsewhere, Comex silver was up 1.82% or 31 cents at $17.47 an ounce, while spot platinum was up 0.43% or $4.25 to $994.05 an ounce.

Away from the precious metals market, oil futures also mounted a recovery on a weaker dollar but benchmarks stayed within recent ranges. At 3:29pm GMT, the Brent front month futures contract was up 0.81% or 45 cents at $55.68 per barrel, while the West Texas Intermediate (WTI) was 0.97% or 51 cents to $53.14 per barrel, with North American crude production tipped to rise.

Analysts at Vienna-based JBC Energy said Canadian oil supply would not rise in step with incremental US output. "Our supply outlook for Western Canadian crude production – and more specifically oil sands and syncrude production – is for the rapid growth in 2017 and 2018 [on the back of both a lower baseline and the completion of projects planned during the oil price boom] to wane, with production rising above 3 million barrels per day only after the turn of the decade."

Finally, research by Informa Agribusiness Intelligence suggests the global sugar market is likely to be in deficit for second consecutive year in 2017.

"While sugar lost 65% of its value between 2011 and 2015, last year was the first year that prices posted healthy gains. Given the continued deficit prices are expected to remain firm for most of 2017 as well. Around the world, the low cost of fuel, weather conditions and new domestic policy will all play a role in sugar and ethanol prices in the year ahead," the market intelligence outfit wrote in its Agribusiness Annual assessment of the year.

At 3:55pm GMT, the ICE Sugar contract for March delivery was up 0.20% or 4 cents to $20.35 per pound.