Gold rises in the wake of a retreating US dollar, potential rail strike weighs on US NGAS, Cotton futures under pressure
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Summary:
- The US dollar retreated from a recent high, cousin gold prices to end a four-day slide.
- US natural gas futures declined after jumping 7.5% in the previous session.
- Cotton futures continued to be under pressure from persistent demand worries
Gold prices rise in the wake of a weaker USD
As the dollar retreated from a recent high, gold prices surged above $1,740 an ounce on Tuesday, ending a four-day slide. Investors were waiting for the minutes of the most recent Federal Reserve meeting, which may provide insight into the timing of future US interest rate increases. The comments of individual Fed officials were also analyzed by traders. For example, San Francisco Fed President Mary Daly cautioned against overtightening, while Cleveland Fed President Loretta Mester stated that she wants to see sustained declines in inflation before she can support a halt. The rate outlook has a significant impact on gold since it makes holding non-yielding metal more expensive, decreasing its appeal.
Gold Dec ‘22 Futures Price Chart
NGAS declined after a 7.5% rise in the previous session
As gas traders watched weather patterns, the delay in Freeport's restart, and a potential rail strike, US natural gas futures declined after jumping 7.5% in the previous session. The largest US rail union's members rejected a tentative contract agreement signed in September, increasing the likelihood of a year-end strike that could halt coal shipments and make power plants use more gas. Additionally, according to current forecasts, extremely cold weather is expected to arrive during the first week of December, which will increase demand for gas-powered heating. On the other hand, more gas is anticipated to be kept available for domestic use now that the restart of the Freeport LNG export facility has been postponed until mid-December while repairs are made to the damage caused by the explosion in June. US utilities added 64 bcf of gas to storage last week, according to EIA data, bringing gas stockpiles closer to the 3.651 tcf five-year average for this time of the year.
NGAS Dec ‘22 Futures Price Chart
Cotton weighed down by concerns around demand
Cotton futures continued to be under pressure from persistent demand worries resulting from difficult economic conditions and increased supplies, remaining close to a nearly 22-month low of last month and roughly 50% below their May peak. The US Department of Agriculture revealed larger-than-anticipated domestic production and lower worldwide demand forecasts for 2022–2023 in its most recent monthly report. A decline in the Southwest is more than compensated by increases elsewhere, resulting in a 1.5% increase in production in the United States, to 14.0 million bales. Additionally, it is anticipated that this month's worldwide cotton consumption will be 650,000 bales lower, with mill use in Pakistan and Bangladesh expected to be reduced by 300,000 bales.
Cotton Mar ‘23 Futures Price Chart
Sources: finance.yahoo.com, tradingeconomics.com
