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Commodities: Metals gain before Trump's Union of State address
Base metals gained ahead of US President Donald Trump's first State of Union address on Tuesday.
Donald Trump is expected to outline a $1.7trn plan "that may boost federal infrastructure spending by 33 percent in 2019 and 2020, and extend federal spending to 2028," wrote Philip Ng, analyst at Jefferies.
Three-month copper futures on London Metal Exchange rose 0.4% to $7'114 a ton, while three-month LME zinc futures consolidated near $3'550, after gaining as much as 3.1% to $3'584 on Monday.
US dollar appreciation weighed on energy prices for the second consecutive day. West Texas Intermediate futures fell 1.2% to $64.76 a barrel in Asia and Brent crude dipped 0.84% to $68.86 a barrel.
Besides the strong US dollar, investors are also worried that US crude stockpiles may have extended last week, for the first time in eleven weeks.
"The market could be vulnerable to further signs of production increasing in response to higher prices" warned Ric Spooner, analyst at CMC Markets. In fact, higher oil prices could encourage an increased output and jeopardize the price recovery in turn.
According to the consensus of analyst expectations, the US stockpiles may have risen 800'000 barrels last week. The EIA data is due on Wednesday.
Gold lost as much as 0.42% to $1'334.54 an ounce, as the US dollar and treasury yields rose. The US 10-year yield hit 2.72%, the highest since April 2014.
Rise in US yields increase the opportunity cost of holding the non-interest-bearing gold and encourage investors to unwind their long positions in the precious metal.
Looking at company news, Australia's largest gold miner Newcrest Mining said the second quarter output rose 17.2% compared to the previous quarter. Output at its Cardia mine, which was hit by an earthquake in April, rose 50% in the latest period. The company maintained its full-year guidance for year to June 30 at 2.4% to 2.7%.