Gold Falls and Oil Firms as Markets Shrug Off Turkey Coup

Published: 18 July, 2016 12:43

Gold slid one per cent on Monday (July 18) as investor jitters calmed following the failed coup attempt in Turkey, while oil prices edged higher with the turmoil unlikely to hit energy supplies.

Copper fell for a second session on pressure from a stronger dollar while corn prices jumped, underpinned by forecasts of hot-dry weather potentially reducing U.S. crop yields.

Turkey widened a crackdown on suspected supporters of a failed military coup, taking the number of people rounded up in the armed forces and judiciary to 6,000, and the government said it was in control of the country and economy.

Spot gold, which fell more than one per cent to a low of $1,323.7, was down 0.7 per cent to $1,328.60 an ounce by 0523 GMT. Bullion fell more than 2 per cent last week, the first weekly decline in seven weeks.

Oil markets appears to display fatigue

“Turkey is not a big oil producer nor consumer, and the oil market appears to be displaying fatigue in response to repeated counts of geopolitical ‘events’ in the last few weeks, and thus only seems to react more strongly to events that matter on the fundamental side. Gold prices had risen quite a bit in the aftermath of Brexit but now prices are just holding at elevated level,” said Vyanne Lai, an economist at National Australia Bank.

Market is looking past the coup

For energy markets, Istanbul’s Bosphorus Strait, a key chokepoint for oil which handles about 3 percent of global shipments, mainly from Black Sea ports and the Caspian region, was reopened on Saturday (July 16) after being shut for several hours after Friday’s attempted military coup.

“The market is looking past the coup. There is no disruption to shipping. There is nothing in terms of short-term risk to oil supply,” said Ric Spooner, chief market analyst at Sydney’s CMC Markets.

Brent crude futures rose 20 cents to $47.81 a barrel after closing up 24 cents in the previous session, while U.S. crude was little changed at $45.98 a barrel after ending the previous session up 27 cents.

London copper fell for a second consecutive session, while Chicago corn rose one percent.

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