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Metals rally on trade optimism
On Wednesday, zinc and nickel prices bounced off from a selloff just a day earlier on a report China and America would resume trade talks, while a weaker evergreen buck also backed market sentiment.
Nickel tacked on by 3.48% hitting 12,637.50, zinc acquired 3.14% being worth 2,394.50.
American Treasury Secretary Steven Mnuchin reached out to Chinese officials with an offer to resume trade negotiations in the next few weeks.
The negotiations would take place before the current presidential administration implements extra levies on China’s imports. It backed investor expectations that an upbeat outcome on trade negotiations could convince Trump to give up his initiative to slap levies on an extra $267 billion of China’s imports.
Optimism for an improvement to China-US trade relations arose just a day after the Chinese government informed the World Trade Organization of its intention to slap $7 billion a year in sanctions on America, referring to America’s non-compliance with a ruling in a clash over American dumping duties.
The Chinese economy has suffered since the beginning of the trade conflict with America, raising questions as for the strength of demand because China turns out to be the world’s number one consumer.
Copper managed to ascend by 2.04% reaching $2.68. Aluminum jumped by 0.49% trading at 2,057.75.
At the same time, precious commodities tacked on because a weaker greenback contributed to upside momentum.
Estimating the greenback’s purchasing potential versus its primary rivals the USD index went down by 0.35% being worth 94.72.
Greenback-denominated assets, including gold are very sensitive to fluctuations in the American dollar. A dive in the US currency makes the yellow metal less costly for those who hold foreign currency, thus increasing demand.
December delivery gold futures added 0.85% on the Comex exchange showing $1,212.40 troy ounce.
Besides this, silver futures jumped by 0.86% trading at $14.28 a troy ounce.
Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.