Commodities Round-up: Oil and gold see lacklustre trading in absence of obvious market drivers

Precious metals were broadly flat on Wednesday (7 September), while oil futures largely maintained the previous session's trading levels as a distinct lack of obvious market drivers resulted in lacklustre European trading. With precious metals taking a breather following spikes on receding US rate hike expectations, the Comex gold contract for December delivery was up a mere 0.07% or $1.17 to $1,355.20 an ounce at 1:50pm BST.

Concurrently, Comex silver futures were 0.14% or 3 cents lower at $20.09 an ounce on profit taking following an overnight rally, while spot platinum was up a marginal 0.12% or $1.30 to $1,100.05 an ounce.

Data released on 2 September showed the US economy added 151,000 jobs last month, slowing sharply from the previous two months and falling short of the consensus forecast for a 173,000 gain.

The lower-than-expected figure seemed to all but rule out the chances of the US Federal Reserve hiking interest rates this month sending precious metals higher across the board overnight led by gold.

FXTM research analyst Lukman Otunuga said gold displayed an incredible appreciation on Tuesday following a further erosion of optimism over the Fed raising interest rates in September.

"With hopes fading over the Fed stepping forward to raise rates in September, the yellow metal could be open to further gains moving forward. From a technical standpoint, prices have turned bullish on the daily timeframe and the breakout above $1345 could open a path towards $1355."

Away from the precious metals market, oil traders also paused for breath as the market ran out of obvious drivers having digested the Saudi-Russian agreement on oil market stability which promised cooperation between Moscow and Riyadh but unveiled no output freeze or lowering of any description.

At 2:15pm BST, the Brent front month futures contract was up 0.21% or 10 cents at $47.36 per barrel. However, West Texas Intermediate futures rose 0.33% or 15 cents at $44.98 per barrel.

Meanwhile, market commentators continue to doubt any tangible production freeze could be achieved by oil exporters. David Fyfe, head of market research and analysis at commodities trader Gunvor, opined at the Asia Pacific Petroleum Conference in Singapore that an agreement was unlikely.

"There won't be an agreement but it does no harm to keep talking about this because that itself is oil price supportive. Of course, there's a risk of crying wolf. But at some stage it's the law of diminishing returns when you keep talking about a production agreement and not actually reach one."