A weekly round up of the latest commodity news in the UK. Updated every Thursday morning, the report tracks the price movements of popular commodities such as oil and gold.
September Copper (COMEX) Chart (29/07/10 11:00)
| Daily % Chg |
0.03% |
|
3 months |
-4.58% |
| 1 week |
2.59% |
|
6 months |
-3.61% |
| 1 month |
5.08% |
|
1 year |
35.30% |
Details
| Prev close |
324.55 |
|
52 week high |
366.70 |
| Last trade |
324.65 |
|
52 week low |
244.00 |
| High |
325.75 |
|
Low |
322.65 |
Bloomberg Median Forecasts
| Q1 2010 |
325.00 |
|
Q3 2010 |
304.00 |
| Q2 2010 |
313.00 |
|
Q4 2010 |
308.00 |
|
|
|
|
|
Commentary
September copper futures traded at $3.2465 per pound on Thursday morning, representing a 2.6% increase on the week. The industrial metal has rallied on the back of positive developments in the European banking sector as well as on the remarks of Chinese central bank officials. The much talked about European bank stress tests together with Basel Committee’s recent proposals has bolstered confidence in the European financial system and helped revive risk appetite, adding further strength to the rebound in copper prices. The expectation that China will maintain loose monetary policy to stimulate domestic growth has also supported the commodity. Earlier this week, the Financial News reported that Ma Delun, the deputy central bank governor, has vowed to maintain ‘moderately loose’ monetary policy in the second half of this year. This follows similar comments from the Chinese Premier Wen Jiabao, who last week pledged to maintain policy stability. Anthony Grech, London
Spot Gold Chart (29/07/10 11:00)
| Daily % Chg |
0.28% |
|
3 months |
-1.05% |
| 1 week |
-2.35% |
|
6 months |
7.33% |
| 1 month |
-5.95% |
|
1 year |
24.46% |
Details
| Prev close |
1163.60 |
|
52 week high |
1265.30 |
| Last trade |
1166.82 |
|
52 week low |
925.90 |
| High |
1169.45 |
|
Low |
1162.88 |
Bloomberg Median Forecasts
| Q1 2010 |
1102.50 |
|
Q3 2010 |
1175.00 |
| Q2 2010 |
1148.00 |
|
Q4 2010 |
1197.50 |
|
|
|
Commentary
Spot gold has been one of the worst performers of the precious metals group, falling 2.35% on the week to $1,166.82 per troy ounce on Thursday morning. This compares with a 1.3% weekly gain in spot platinum and 4% rise in spot palladium prices. The dynamics that have propelled gold to record high of $1,265 per troy ounce in June are unwinding, and that is naturally having an impact on gold prices. The precious metal that is perceived as a currency of last resort appears to be losing its shine, as abating sovereign debt concerns help restore confidence in the eurozone region and encourages investors to increase their exposure to riskier asset classes. The European bank stress test report, issued by the Committee of European Bank Supervisors (CEBS) late Friday, coupled with the looser regulatory reforms, announced by the Basel Committee earlier this week, have acted as a catalyst for reviving confidence in the European financial system. Spot gold sank nearly 1.9% on Tuesday, when the Basel Committee proposed relaxing capital and liquidity requirements for European banks to make it easier for the sector to meet more stringent capital requirements when they are eventually introduced. Although recent developments are encouraging, risks to the global economic recovery still remain, so gold could still make a surprise comeback. Wallace Ng of ABN Amro said gold ‘will see some period of consolidation near this or a slightly lower level until next week.’ However, he also signalled that gold is close to finding a floor, saying he believes the recent ‘correction phase of gold is about to be completed’.[1] Gold is very much a seasonal metal, which tends to appreciate in August, ahead of religious holidays in India, the world’s largest consumer of the metal.
Anthony Grech, London
September NYMEX Performance Chart (29/07/10 11:00)
| Daily % Chg |
-0.01% |
|
3 months |
-12.71% |
| 1 week |
-2.93% |
|
6 months |
-0.90% |
| 1 month |
-2.43% |
|
1 year |
9.92% |
Details
| Prev close |
76.99 |
|
52 week high |
92.18 |
| Last trade |
76.98 |
|
52 week low |
66.62 |
| High |
77.45 |
|
Low |
76.78 |
Bloomberg Median Forecasts
| Q1 2010 |
77.00 |
|
Q3 2010 |
80.00 |
| Q2 2010 |
80.00 |
|
Q4 2010 |
82.80 |
|
|
|
|
|
Commentary
September crude oil futures traded at $76.98 a barrel on Thursday, representing a 2.9% drop on the week. The revival in risk appetite has had a minor influence on crude oil prices this week because the commodity’s underlying fundamentals have not been supportive. Crude oil declined for a second day on Wednesday after the Energy Information Administration (EIA) revealed that commercial crude oil stockpiles surged by 7.31 million barrels to 360.8 million last week, the biggest increase since March 19. This follows a report from the American Petroleum Institute, which showed a 3.1 million barrel increase in crude oil inventories over the same period. These reports confounded analysts, who were, on average, expecting a 1.73 million barrel draw down. Separate data showing a bigger-than-expected drop in US consumer confidence and weaker demand for durable goods also weighed on crude oil this week. Investors should watch out for the US second-quarter GDP figures that are due out on Friday as well as the US and Chinese manufacturing data on Monday. These figures are likely to influence sentiment and also fuel volatility, which could provide profitable entry or exit points. Anthony Grech, London
Notes: Source: [1] Bloomberg News (29 July 2010)
Chart data sourced from Bloomberg. Bloomberg Median Forecasts are produced by Bloomberg by taking the median level from rates forecast by a number of contributors. These contributors consist of leading banks and security firms.
Disclaimer: IG Index provides an execution-only service. The material above does not contain (and should not be construed as containing) investment advice or an investment recommendation, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Index accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of the above information. Consequently any person acting on it does so entirely at his or her own risk. The research does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. This communication must not be reproduced or further distributed.
