Commodities: Base metals pare gains on stronger US dollar, rising inventory  

The bounce in the US dollar pulled commodity and metal prices down from multi-year highs on Thursday, amid the US President Donald Trump revealed his preference for strong US dollar in an interview at the World Economic Forum in Davos.

Three-month copper futures fell 0.17% to $7,138.00 on the London Metal Exchange. On-warrant copper inventories in LME-approved warehouses surged 67% to 253,400 tons, data showed.

Rising inventory "is starting to dampen some of the bullishness," according to Ryan McKay, commodity strategist at TD Securities, after "a weaker dollar has really given a bid to copper and base metals".

LMEX index of six primary non-ferrous metals eased 0.3% to 3’434.9.

Brent crude futures erased 1.7% to $70.07 per barrel from Thursday’s top of $71.28/barrel.

West Texas Intermediate futures reversed gains as well, sliding from $66.66, the highest level since December 2014, to $64.91 a barrel on Friday.

"One area of possible support that remains is $62.56, with the previous higher low at $63.00 also coming into play," wrote Chris Beauchamp, chief market analyst at IG.

Gold recovered 0.40% to $1’354, after slipping more than $20 on Thursday due to a sharp appreciation in the US dollar.

The precious metal is heading toward the sixth weekly gain in seven weeks. Bullion opened the week at $1’335.19.

In its annual report released recently, World Gold Council suggested that gold will continue performing in 2018, as the global economic growth, prospects of higher market volatility due to central bank interest rate hikes and heightened risk of correction in all-time high stock markets could increase demand in the yellow metal.

ANZ analysts pointed out that "further weakness in the dollar and rising risks of a correction in equity markets, in particular, should be supportive."

Further rise to $1’400 a bullion is "achievable" according to Stephen Innes, head of Asia Pacific trading at Oanda.

By Ipek Ozkardeskaya