Commodities Round-up: Gold futures stay flat but oil slides by 3.2% on Saudi price cuts

Gold futures were decidedly flat on Monday (1 August) on profit taking overtures by traders, while oil benchmarks hit new lows due to Saudi Arabia's decision to cut its asking price for crude exports to Asia.

With the Bank of England poised to cut interest rates in the eyes of many, at 16:20pm BST, the Comex gold futures contract for December delivery was down 0.06% or 40 cents to $1,357.10 an ounce. However, Comex silver spiked 1.07% or 22 cents to $20.57 an ounce on hedging calls by traders, while spot platinum also rose 0.95% or $10.82 to $1,159.50 an ounce.

FXTM research analyst Lukman Otunuga said: "Gold ventured higher last week with prices clipping two week highs above $1,354 as the lingering impact of Friday's soft second quarter US GDP figure of 1.2% encouraged investors to install a round of buying.

"The breakout above $1,345 is quite significant with prices poised to trade towards $1,370 as a combination of dollar weakness and concerns over the global economy bolster gold's allure. Although the metal remains highly sensitive to US interest rate hike expectations, the persistent global uncertainty and overall risk-off trading environment could keep prices buoyed moving forward."

Meanwhile, there was no respite for the oil and gas market after Saudi Aramco, the world's largest oil exporter, lowered the pricing terms for its Arab Light crude sold to Asian buyers by $1.10 per barrel below Singapore benchmark prices; the biggest cut on record since November 2015, according to Bloomberg data.

At 16:34 BST, the Brent front month futures contract was down 3.22% or $1.40 to $42.13 per barrel, while the West Texas Intermediate was down 3.21% or $1.33 to $42.27 per barrel, as concerns over oil demand continued to dominate market discourse.

Analysts at Vienna-based JBC Energy said the past 18 months have seen aggregate consumption in Asia, Europe and North America average 1.6m barrels per day (bpd) in annual growth, reflecting the stimulus from lower prices at the pump and, in some cases, economic recovery and/or strength (e.g. US, India).

"This is a complete reversal of the dominant trends prior to 2014. However, we do not expect the pronounced weakness observed in June to last. Our forecast is for more balanced demand growth ahead, split roughly 2:1 between Asia/Europe/North America vs Middle East/(former Soviet Union) Eastern republics/Central and Southern America/Africa, which we collectively expect to average 1.1m bpd in the coming 18 months."