I. Precious Metals
Gold
Spot gold was down 1.3 percent at $1,232.61 an ounce on Thursday, on track for the biggest one-day fall since Dec. 15, buoyed by a firm dollar and rising U.S. rate hike expectations in March following buoyant U.S. economic data and hawkish comments from Federal Reserve governors.
The number of Americans filing for unemployment benefits fell to near a 44-year low last week, pointing to further tightening of the labor market even as economic growth appears to have remained moderate in the first quarter. The stronger labor market and rising inflation could push the Federal Reserve to raise interest rates this month. Initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 223,000 for the week ended Feb. 25, the lowest level since March 1973, the Labor Department said on Thursday. The figure of the previous week was revised down 2,000. It was the 104th straight week that claims remained below 300,000, a threshold associated with a healthy labor market. That is the longest stretch since 1970, when the labor market was much smaller. It is now at or close to full employment, with an unemployment rate of 4.8 percent. After the report, stocks on Wall Street slipped, the dollar firmed, while prices for U.S. government debt fell.
Labor tightness, combined with rising inflation, could encourage the Federal Reserve to raise interest rates at its March 14-15 policy meeting. Fed Chair Janet Yellen and Vice Chairman Stanley Fischer will speak on Friday, likely providing further signals on the U.S. central bank's policy path. A correction in gold, however, is likely to be shallow as investors remained friendly to bullion as a hedge against global uncertainty and rising inflation, analysts said.
On technical front, turning point in the medium term has not show up, suggesting retaining market confidence. Major institutional investors lifted year-end 2017 gold price forecast to $1,300. Bullion is widely expected to slip below $1,200 once again before regaining its ground within the year. Market volatility will pick up in the second half of 2017 no matter whether the U.S. central bank raises interest rates or not. But the accelerated turmoil in euro zone will provide a floor to gold.

Silver
Silver fell 3.8 percent to $17.71 an ounce, crossing below the 20-day and 200-day moving average, the key support since the start of 2017, and showing market panic in a period with an unusually high concentration of Fed hawkish speeches. Short positions shot up after recent gains of precious metals. A medium-term downturn is expected if it breached the support of $17.6. The next support can be found at $15.7 hit at the end of last December.

II. Commodities
Crude Oil
Oil prices fell more than 2 percent on Thursday after Russian crude production remained unchanged in February, showing weak compliance with a global deal to curb supply to tighten the oversupplied market. Russia's February oil output was unchanged from January at 11.11 million barrels per day (bpd), energy ministry data showed, with cuts remaining at 100,000 bpd or just a third of the levels pledged by Moscow under the agreement with the Organization of the Petroleum Exporting Countries.
A stronger dollar also weighed on green-back denominated oil. The dollar rose to seven week highs against a basket of currencies after hawkish comments by a Federal Reserve official encouraged investors to expect a near-term interest rate hike. The oil markets extended losses from Wednesday when government data showed crude inventories in the United States, the world's biggest oil consumer, rose for an eighth straight week to a record 520.2 million barrels last week.
OPEC has boosted already strong compliance with the group's six-month deal that began in January to around 94 percent, after it cut output for a second month in February, a Reuters survey found. This would provide a floor to oil prices. Brent futures ended the session 2.3 percent, lower at $55.08 per barrel and U.S. crude settled down 2.3 percent, at $52.61.

Copper
London Metal Exchange copper ended down 1.4 percent at $5,930 a tonne on Thursday, after recent gains tempted investors to book profits, though sentiment remains underpinned by manufacturing reports from China and elsewhere that pointed to firmer demand. Fed Chair Janet Yellen is set to speak on Friday, and could provide the strongest indication on a move in the coming weeks, likely a weight on copper.
The official and Caixin Purchasing Managers' Index (PMI) expanded faster than expected in February, boding well for an acceleration of China’s economic recovery in the first quarter. The metal hit a 21 month high last month on supply disruptions in Chile and Indonesia. The lingering impact of these events will continue to provide a floor to copper prices. Also underpinning copper, the disruption at Chile's Escondida copper mine, the world's biggest, turned violent on Wednesday when a group of striking workers blocked a highway.
In short, general fundamentals are expected to boost copper, except the expectations of interest rate hike from the Federal Reserve.

Soybean
U.S. soybean futures fell on Thursday, pressured by the ongoing harvest of a projected record-large crop in Brazil. Private analytics firm Informa Economics raised its estimate of Brazil's 2016/17 soybean crop to 108 million tonnes, a record if realized, up from 106.5 million previously. The U.S. Department of Agriculture reported weekly old-crop soybean export sales at 427,700 tonnes, in line with trade expectations, and old-crop soymeal at 139,500 tonnes, at the low end of expectations. Chicago Board of Trade May soybeans fell 14-1/2 cents at $10.37-1/4 a bushel. Soymeal and soyoil futures tracked soybeans. May soymeal edged down $4.5 to $334.8 a tonne. May soyoil lost 0.61 cents to 34.13 cents. Traded volumes of soybean, soymeal and soyoil were expected to stood at 149,554 lots, 76,861 lots, and 86,107 lots respectively.

Dealing Room, ICBC Beijing Branch
Lv Yan