Gold Prices Settled Flat As The U.S. Dollar

Gold settled flat as the U.S. dollar fell versus China’s yuan against a backdrop of U.S.-China trade tensions. U.S. data recently showed investors added 13,931 contracts to their net short position in the week to July 31, bringing it to 41,087 contracts, the biggest since records became publicly available in 2006. Expectations for increased Chinese stimulus helped take the edge off wider concerns about the worsening Sino-U.S. trade dispute.

US job openings held near record highs in June amid a modest decline in hiring, pointing to further tightening labour market conditions, which economists hope will soon spur faster wage growth. Last Friday saw the release of the US payrolls report, which showed the unemployment rate fell to 3.9% as expected from 4.0% in June, while average hourly earnings rose 0.3% as expected, up from 0.1% in June.  The economy added 157 thousand jobs last month, down from 248 thousand in June, and missing estimates of 191K.

Crude oil settled flat after prices seen supported amid reports that the U.S. restored sanctions against Iran, the world’s fifth-largest oil producer.  Oil prices were also boosted by a report from the Energy Information Administration (EIA), estimating domestic oil production will grow at a slower rate than previously forecast. The EIA cut its 2018 U.S. crude output estimate to 10.68 million bpd from 10.79 million bpd and its 2019 output estimate to 11.7 million bpd from 11.8 million bpd, citing lower crude prices are expected to curb U.S. shale oil output.

Aluminium on MCX settled down -0.71% at 139.45 tracking weakness from LME aluminium prices which dipped 0.3 percent to end at $2,038 a tonne despite the US dollar index softened and closed at 95.165 on Tuesday as the Chinese yuan showed more stability after the country’s central bank on Friday raised the cost of shorting the currency.

According to preliminary estimates, mentha oil production in 2018-19 would be 40,000-45,000 ton against last year’s production of 35,000 tons. There could be chances of crop damage to certain extend due to unfavourable weather condition. Besides, farmers are likely to hold back the stocks as the present prices are not remunerative for them. However, in recent years, the growth in production and consumption of synthetic mentha has influenced the demand for natural mentha. As per sources, India contributes around 80% to the total global mentha oil production.

Moreover, the arrivals have also declined by about 38% in July to 2.55 lakh tonnes compared to last year same month (4.11 lt). Government has increased the export incentives on soymeal to 10% of the free on-board value from the current 7% till Mar 31. India’s soymeal exports in July are expected to hit a six-month high of around 150,000 tn, supported by increase in demand from European countries. However, the central and western India is experiencing a dry spell during the last week of July which may affect standing soybean crop.

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