Crude posted modest about a half percent losses on Monday due to rising risk aversion. Inability of U.S. politicians to reach a deal on raising debt ceiling weighed on prices of risky assets. Today, the world’s top oil exporter Saudi Arabia said it would sell 3 million barrels of oil (in August) to India after Iran cut supplies to this country. This might lead to further dispute between the OPEC’s two largest members. Let us remind that Iran was among countries which opposed an increase in the cartel’s production quotas in June. Earlier this year, Iran also criticized Saudi’s decision to send troops to Bahrain.
Base Metals
On Monday, copper was also a victim of rising risk aversion and posted decent losses. Nevertheless, today in early trading, the red metal erased losses that had posted last week and soared to 9800 USD per ton level. Apart from weakening U.S. dollar, strike at the world’s largest copper mine Escondia supports the price of the metal. Escondia accounts for almost 7 percent of the world’s mined copper output.
Precious Metals
On Monday, markets once again focused on a sovereign debt crisis. Instead to Greece/Euro zone, the focus is now set on an ongoing debate about the U.S. debt ceiling. Hence, rising risk aversion bolstered safe-haven assets and gold price soared to a new all-time high above 1620 USD per troy ounce (USD/toz). Moreover, President Obama in a speech called on congressional leaders to make a compromise on the US debt ceiling said that there had been no progress in the debate so far. Thus, from a short-term perspective, there might be further room for gold strengthening (the final decision on the debt ceiling should be made by 2nd August when the debt should reach its limit).