Commodities Trading Mixed for Second Day

A stronger U.S. Dollar and mixed economic data from China pressured commodities on Tuesday with copper and gold finishing lower while crude oil closed mixed.

Copper

July Comex High Grade Copper is trading slightly better early Wednesday on the back of a rebound in aluminum prices. Aluminum rose to its highest level since 2011 early Wednesday as growing worries over tighter supply following U.S. sanctions on key producer Rusal sustained a rally that has lifted the metal by 20 percent this month.

A rise in the U.S. Dollar against a basket of currencies drove down foreign demand for dollar-denominated copper on Tuesday. Weak industrial data in top base metals consumer China also weighed on prices.

Copper was also dragged lower by weaker aluminum prices. Aluminum is expected to resume its rally as U.S. sanctions disrupt supplies from the world’s No. 2 producer Rusal. Strengthening aluminum prices could be supportive for copper prices.

Chinese industrial output expanded 6.0 percent in March year-on-year, the slowest pace in seven months, while fixed asset investment for January-March also came in below expectations. China’s economy, however, grew 6.8 percent in the first quarter of 2018, slightly faster than expected.

Gold

June Comex Gold is under pressure early Wednesday, weighed down by a slightly better U.S. Dollar and increased appetite for risk.

Gold finished lower on Tuesday, but did claw back most of its early loss on renewed concerns over a U.S.-China trade war. The announcement by China of new import tariffs on U.S. sorghum raised concerns that a trade war was still a risk. However, this potentially bullish news was offset by stronger demand for higher risk assets.

Upbeat U.S. economic data also weighed on gold prices. In the housing sector, building permits came in at 1.35 million units, higher than the 1.33 million unit estimate. Housing Starts also beat their forecast, 1.32 million units to 1.27 million units.

Capacity Utilization was stronger than expected at 78.0% and Industrial Production rose 0.5% versus a 0.3% estimate.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil are surging early Wednesday after a private industry report showed a drop in U.S. crude inventories.

According to the American Petroleum Institute, U.S. crude inventories fell by 1 million barrels last week, to 428 million barrels.

On Tuesday, prices fell on profit-taking, a stronger U.S. Dollar and worries about increasing U.S. production ahead of Wednesday’s U.S. Energy Information Administration’s weekly inventories data.