Most commodities were in bear territory on Thursday with gold slipping from its record highs touched earlier this week. 

Oil prices fell by more than 1% after concerns over oversupply gripped the market. 

Copper prices fell nearly 1% on Thursday as traders booked profits after the red-metal rose sharply in the previous session. 

Oil prices fall

Oil prices fell sharply on Thursday due to expectations of resumption of Kurdish supply. 

Exports are set to resume following an agreement between eight oil companies and Iraq’s federal and Kurdish regional governments.

This morning, oil prices experienced a pullback after a robust start to the week. In Wednesday’s session, front-month West Texas Intermediate (WTI) crude rallied over 5%, nearly reaching $65 per barrel.

On Wednesday, both WTI and Brent crude oil prices rose by approximately 2.5%. This increase was primarily driven by a surprising decline in US crude inventories reported for the previous week.

“This added to existing concerns over the likelihood of significant supply issues emerging as Ukraine continues to pile on its attacks on Russia’s energy infrastructure,” said David Morrison, senior market analyst at Trade Nation. 

“On the flip side, the market expects more supply within days following an agreement between Iraq and Kurdistan to reopen a joint pipeline which passes through Turkey for the first time since March 2023,” he added. 

This should enable exports of around 230,000 barrels per day.

At the time of writing, the WTI crude price was at $64.23 per barrel, down 1.2%. Brent crude was down 1% at $68.63 a barrel

Gold slips

Gold prices surprisingly fell below $3,775 per ounce in Thursday’s session due to stronger US economic data, which boosted the dollar and yields on Treasury bills. 

A stronger dollar makes commodities priced in the greenback more expensive for overseas buyers. 

Initial jobless claims in the US fell to 218,000, beating expectations of 235,000 and down from 232,000 the previous week. 

Concurrently, GDP for the second quarter saw an upward revision to an annualised 3.8% from 3.3%, significantly exceeding forecasts.

Additionally, durable goods orders showed an unexpected increase in August, rising by 2.9%. Excluding defense orders, the increase was 1.9%, suggesting strong business investment.

“Recent remarks from Fed officials highlight the delicate balancing act of containing inflation while supporting employment, which explains their guarded approach to easing,” Vishal Chaturvedi, editor at FXstreet, said in a report. 

Markets still expect an interest rate cut in October. Concurrently, ongoing geopolitical tensions and favorable fundamental and technical conditions are mitigating potential losses in Gold, encouraging buyers to step in on price dips.

At the time of writing, the December gold contract on COMEX was at $3,758.62 an ounce, down 0.3%. 

Morrison said:

The current price action raises several questions: could it be that gold has now topped, or can it continue to rally from current levels?

On the other hand, silver has not yet surpassed its all-time high of $50, which was set in April 2011, unlike gold. The December contract on COMEX was at $44.778 per ounce, up 1.3%.

Copper falls

Copper prices fell on Thursday as traders booked profits after the metal surged sharply as the market continued to digest the sharp move higher sparked by supply risks at Freeport-McMoRan’s Grasberg mine in Indonesia.

LME copper for three-month delivery closed at its strongest level since mid-2023, climbing approximately 3.6% to $10,364 a ton on Wednesday. 

This rally followed Freeport’s declaration of force majeure on contracted supplies and a reduction in its sales guidance. These actions were taken amid ongoing recovery efforts after a serious accident occurred earlier this month.

“The disruption at Grasberg, the world’s second-largest copper resource, underscores the fragility of supply in a market that was already tight,” Neil Welsh, head of metals at FCA regulated multi-asset brokerage Britannia Global Markets, said in an emailed commentary. 

Grasberg’s estimated contribution of 3.5% to 4% of the world’s mined supply is crucial, especially for smelters and traders, Welsh said. These entities are currently facing concentrate shortages, with China being particularly affected.

Together, these developments have injected a strong risk-premium back into prices and magnified the ongoing concerns around sourcing.

The three-month copper contract on LME was at $10,272.40 per ton, down 0.9% from the previous close. 

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