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Oil rises as Russia bombs Syria, U.S. faces hurricane

LONDON (Reuters) – Oil prices rose on Wednesday on concerns of an escalation in the Syrian war after Russia started air strikes against Islamic State and the approach of a hurricane on the U.S. East Coast kept investors wary.

Russian warplanes carried out several air strikes against Islamic State targets in Syria on Wednesday, shortly after the Russian parliament approved military action.

The U.S. National Hurricane Center said the 2015 Atlantic season’s third hurricane, Joaquin, was expected to reach the Bahamas on Wednesday night.

hurricane“Hurricane Joaquin may be having an effect on the market. High seas along the East Coast have been forecast and that could affect barges carrying refined products,” said David Thompson, executive vice-president at Washington-based commodities broker Powerhouse.

U.S. crude, also known as West Texas Intermediate or WTI, was 21 cents higher at $45.44 a barrel by 1458 GMT, on course to end September down 7 percent.

Brent crude oil was up 32 cents at $48.55 a barrel, heading for a 9 percent fall this month.


Gold suffers losses for the session, month and quarter

Gold futures registered a fourth straight day of losses, settling at their lowest level in more than two weeks, as a climb in the U.S. stock market and strength in the dollar dulled the metal’s investment appeal on Wednesday.

The session’s decline contributed to the metal’s losses for the month, quarter and year.

gold-barsDecember gold GCZ5, -1.04% settled at $1,115.20 an ounce on Comex, down $11.60, or 1%, for the session. Based on the most-active contracts, prices lost 1.5% for the month and 4.8% for the quarter. Year to date, gold is down 5.8%.

A reading showing that U.S. companies added a better-than-expected 200,000 private-sector jobs in September, according to payroll processor ADP, helped the metal extend its losses early in the session.

Upbeat economic data may boost prospects that the Federal Reserve will raise interest rates this year, which in turn could provide support for the U.S. dollar DXY, +0.46% Higher rates can be a drag on gold, which doesn’t bear interest, and a stronger greenback can dull demand for dollar-denominated commodities.

“The dollar’s rise has been a wrecking ball for commodity-sensitive assets this year,” said Ken Ford, president of Warwick Valley Financial Advisors. The ICE U.S. Dollar Index has gained more than 6% year to date.

silver_barsAmong the other metals, December silver SIZ5, -0.50% lost 5.5 cents, or 0.4%, to $14.518 an ounce. Prices, based on the most-active contracts, saw a 6.8% quarterly decline and a 0.5% monthly decline in September. Year to date, they were down 6.9%.

Adrian Ash, head of research at BullionVault, said the prospect of an interest-rate hike is still looming, and worries about the economic health of big commodity importer China also have helped fuel that price slump.

Ash said confusion reigns among metals buyers. Some argue that prices for assets like gold might pick up suddenly just as they did during the 2008 financial crisis, when the bankruptcy of Lehman Brothers stoked panic in global markets.

“Maybe it’s the end of the world. Or nothing to worry about. If that feels oddly like mid-2008 to you…when gold slid 25% in 4 months, even as the collapse of Lehman Brothers drew near to mark the sharpest plunge in global trade since the 1930s…you aren’t alone,” Ash said in a recent note.

platinum_barOn Comex Wednesday, October platinum PLV5, -0.94% lost $9.90, or 1.1%, to end at $907.20 an ounce, with prices 25% lower year to date. Read: Volkswagen’s scandal is whacking platinum prices, lifting palladium

December palladium, meanwhile, PAZ5, -0.90% fell $6.75, or 1%, to $650.95 an ounce. Prices have skidded nearly 19% for the year so far.

December high-grade copper HGZ5, +3.91% picked up 9 cents, or 4%, at $2.341 a pound, but the base metal has plunged 17% year to date.


Gold futures mark first gain in three sessions

Gold futures settled higher on Wednesday, finding support after posting losses over the past two trading sessions.

Platinum prices, meanwhile, continued to trade at their lowest levels in more than six years as the Volkswagen scandal raised worries about demand for the metal in car parts.

December gold GCZ5, -0.13% gained $6.70, or 0.6%, to settle at $1,131.50 an ounce on Comex, while December silver SIZ5, -0.09% tacked on 3.3 cents, or 0.2%, to $14.789 an ounce. On Tuesday, gold settled 0.7% lower, with traders focused on expectations that the Federal Reserve will raise interest rates this year.
“The correction of the last couple of days has run its course, and gold is resuming the upswing that started back in July,” said Colin Cieszynski, chief market strategist at CMC Markets.

“The Fed has delayed interest rate liftoff and even when they do start raising rates…the pace of increases will be a lot slower than the 10-plus straight increases we had [in the] last cycle,” he said.

Meanwhile, “the soft China news keeps some central banks on their heels, but this could be offset by the less dovish-than-expected” comments from the European Central Bank’s President Mario Draghi, he said.

The preliminary Caixin China Manufacturing Purchasing Managers’ Index, a gauge of nationwide manufacturing activity, fell to a six-and-a-half year low of 47.0 in September.

Data also released Wednesday show that the preliminary U.S. Markit manufacturing index was unchanged at 53.0 last month.

“Traders and pundits are still focused on the Fed’s will-they-won’t-they quarter point hike, but [Wednesday’s] bad Chinese data fit exactly” with Fed Chairwoman Janet Yellen’s key excuse for delaying a rate hike last week, said Adrian Ash, head of research at BullionVault.

Looking ahead, “the lack of global inflation means that the focus remains firmly on the outlook for U.S. monetary policy and therefore Federal Reserve remarks and macroeconomic data,” said Fawad Razaqzada, technical analyst at

Riskier assets like U.S. stocks have lost ground this week, with the S&P 500 SPX, -0.20% down 0.8% as of Tuesday’s close, leading some analysts to predict that gold should score gains on haven demand.

“With other markets looking more stressed, gold may well start to shine again,” said William Adams, head of research at FastMarkets.

Among other metals traded on Comex, December copper HGZ5, +0.00% added 1.1 cents, or 0.5%, to $2.308 a pound.

October platinum PLV5, +0.28% lost $5.10, or 0.5%, to $932.40 an ounce, extending losses in the wake of Tuesday’s 3.7% drop.

“Platinum’s tie-in to diesel engines will not be doing it any favours,” following the Volkswagen scandal, said Adams, in a note Wednesday.

But palladium, which isn’t used as much in diesel cars, saw its December contract PAZ5, +2.00% jump $34.75, or 5.7%, to $645.70 an ounce after a 0.8% loss a day earlier.


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