Commodities: Gold and cocoa higher, Chinese crude oil futures jump in market debut
Commodities drifted slightly lower at the start of the holiday-shortened week, despite ongoing weakness in the Greenback, although gold and cocoa extended their recent gains.
Meanwhile, overnight the spotlight was on the debut of Chinese-currency denominated oil futures in Shanghai as they surged higher.
June 2018 gold on COMEX managed to forge ahead, rising 0.35% to $1,360.40/oz. as of 1830 BST, buoyed by a raft of announcements of Russian diplomats being expelled from their host countries in protest at Moscow's alleged involvement in the assassination attempt of an ex-agent in London.
Soft commodities on the other hand were mixed overall, although cocoa continued to make new highs, with the ICE-traded contract running up by another 0.88% to $2,638.0 per metric tonne.
May 2018 CBoT corn on the other hand was down by 0.73% to $3.7450 a bushel, while CME live cattle was lower by 0.87% to $1.0528/lb.
Three-month LME copper also ended lower, on news of progress in wage talks between BHP Billiton and Antofagasta, on the one hand, and their workers.
"LME trading activity through the overnight session and London morning was contained in narrow ranges but with copper prices still under some pressure to 6530 area after LME stocks rose 35k mt and news filtered through from Chile that La Escondida workers had agreed to early wage talks with BHP ahead of the June contract expiry and that Antofagasta was reportedly making progress with negotiations at its Los Pelambres mine," said traders at Sucden Financial.
In the energy patch, the launch of Beijing's new yuan-denominated crude oil futures saw the most heavily-traded contract for September expiry jump from its reference price of 416 yuan to 440 yuan.
The new contracts, which were open to foreign investors, would initially be exempt from taxes for overseas buyers, be they institutional or retail.
"Many people are wondering if the start of this contract is going to break the link between the dollar and oil. That could have serious implications for the future of the dollar’s role in world trade. After all, China is now the world’s largest consumer of most commodities; it might make sense to price them in CNY, not USD.
"Personally, I don't think it's likely to break the link. I think that would happen only if China commits to defending Saudi Arabia and the other Sunni countries against Iran, which I don’t think is likely to happen anytime soon. That kind of intervention is not part of China's foreign policy. Furthermore, for now it's a lot easier to finance trade in dollars rather than in CNY, because dollars are simply more widely available in the international banking system," said Marshall Gittler at ACLS Global.
Gasoline futures also declined, retreating 0.98% to $2.0136 a gallon.
Brent crude oil futures for next month delivery dipped 0.37% to close at $70.19 a barrel on the ICE - albeit following the fresh 52-week highs hit on Friday.
From a bird's eye view, the US dollar spot index was down by 0.42% at 89.056, alongside a 0.06% dip in the Bloomberg commodity index to 87.39.