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Commodities: Gold tumbles after Trump infrastructure pledge, rising rate-hike expectations

By Andrew Schonberg

Date: Wednesday 01 Mar 2017

Commodities: Gold tumbles after Trump infrastructure pledge, rising rate-hike expectations

(ShareCast News) - Gold tumbled as traders donned rose-tinted glasses and sold safe-haven assets after US President Donald Trump's policy-light speech to Congress, lapping up his pledge to spend $1trn rebuilding the US's infrastructure and the prospect of another US rate rise.
At about 15:20 GMT, Comex-quoted gold was down 0.96% to $1241.80 an ounce. Silver fell 0.16% to $18.14 an ounce.

Industrial favourite copper rose a heady 1.58% to 275.5 cents a pound, with three-month industrial tin, zinc, aluminum and copper on London Metals Exchange all enjoying a boost in the wake of Trump's comments.

"We've seen a turbo charged start to the month on the back of US President Donald Trump's pledge to spend up to $1trn on rebuilding the infrastructure of the United States," said Michael Hewson, chief market analyst at CMC Markets UK.

He noted the FTSE 100 and FTSE 250 were both making new record highs, as the reflation trade took another leg higher. Wall St was firmly ahead, as were key European equities indices.

While gold weakened on the general move from safe-havens, its third successive daily decline also had a lot to do with markets pricing in the prospect of a US rate rise later in March.

Connor Campbell, financial analyst at Spreadex, commented that it appeared investors had simply been fussed by the lack of detail in Trump's Congress soapbox.

"Despite basically just being a greatest hits of policy promises the speech has been enough to cause some extraordinary growth this afternoon," Campbell added.

Chris Beauchamp, chief market analyst at IG, also noted the ramping-up of expectations regarding a US Federal Reserve hike in March.

"Policymakers have been falling over themselves in the rush to suggest the US economy is ready for another hike, just one quarter after the last one," opined Beauchamp.

Meantime, Nymex-priced West Texas Intermediate crude was up 0.52% to $54.29 a barrel, and Intercontinental Exchange-traded Brent was up 0.62% to $56.86 a barrel.

Hewson of CMC Markets UK said crude's rise was on the back of expectations for higher demand following Trump's speech.

"But they remain constrained by the fact that inventories remain at record levels and some uncertainty as to whether the OPEC cuts are actually as comprehensive as first led to believe," he said in a statement.

Among agriculturals, Chicago Board of Trade-priced corn was up 1.0% to 377.5 cents a bushel, with wheat ahead 2.42% to 454.5 cents a bushel.

On ICE, cocoa was down 0.73% to $1895 a MT, with cotton No.2 up 0.12% to 76.43 cents a pound. Live cattle rose 0.25% to 118.23 cents a pound.

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