Commodity Blog

Commodity Prices – Gold

Gold and silver erased this year’s gains as the credit crisis in Europe continue to weaken demand for raw materials. Talks about Greece exiting the euro-union are becoming more and more serious and some analysts even speculate about collapse of the eurozone. Traders seek a safe haven amid uncertainty and economic turmoil, but it looks like the dollar took the role of refuge that was traditionally attributed to precious metals. Gold was down from $1,541.40 to $1,535.80 per ounce on COMEX yesterday, reaching $1,533.80 intraday — the lowest price since December 29. Silver fell from $27.69 to $26.90 per ounce yesterday — the lowest settlement since December 29, while today it opened at$27.21.

Wheat jumped today for the fourth trading session as bad weather in various parts of the world threatened to curb output. Russia continues to suffer from drought and parts of Kansas suffer from the same problem. Russia is the world biggest exporter. Wheat is the fourth biggest US crop and Kansas is the biggest wheat-growing region of the United States. Wheat climbed from $6.3825 to $6.4325 per bushel as of 00:51 GMT on CBoT today.

Commodities continue to be beaten by the crisis in Europe. Oil extended its decline and gold erased this year’s gains as the dollar strengthened on the European problems, pushing commodity prices down. Greece is still unable to form a coalition government and talks about the country leaving the eurozone are becoming more serious as European politicians consider such outcome as a reality perhaps for the first time.

Crude oil has its own bearish story as Ali al-Naimi, the Saudi Arabian Minister of Petroleum and Mineral Resources, continues to call for lower prices. And it looks like he is serious about it as the Organization of the Petroleum Exporting Countries reported that Saudi Arabia ramped up production to the highest level at almost three decades.

June futures for delivery of crude oil dropped as much as $1.35 to $94.78 per barrel on NYMEX today, the lowest price since December 19. Brent grade of crude was down from $111.94 to $111.04 per barrel as of 21:19 GMT on ICE today, following the decline to $110.04 — the lowest settlement since January 25. Gold price slid from $1,563.10 to $1,561.90 on COMEX today — the lowest level since December 30.

These three short videos show what analysts expect of the week starting May 14 for gold, silver and oil. All of the commodities demonstrated bearish trends and the videos show potential downside targets in case the trends would persist. Additionally, the conditions under which the bearishness may be broken are also discussed.

Gold traded close to the lowest level this year before rising a little. The precious metal gives little hopes to bulls as problems in Europe make the dollar stronger, subduing commodity prices. The United States also causes some concern, even though it is in far better shape than the debt-ridden European Union. The US Producer Price Index fell 0.2 percent today, even though forecasters promised it to stay unchanged. Gold was up to $1,589.60 today on COMEX after reaching $1,586.10 — the lowest level since January 3.

Cotton reached the lowest level in 21 months today on a forecast that global stockpiles will swell. The US Department of Agriculture predicted that world inventories will climb 10 percent to 73.75 million bales in the season that begins August 1. Rains in Texas improved prospects for crops that were hurt by drought last year, adding to potential supply. At the same time, economic problems in countries across the world are likely to diminish demand for commodities, including cotton. Cotton slumped from $0.8149 to $0.7885 per pound on ICE today after it reached earlier $0.7716 — the lowest price since July 30.

Commodities continued to decline as Europe is still a source of uncertainty and risk aversion. Greece is unable to form a government, leading to speculation that the country may leave the eurozone. Such outcome can potentially threaten the integrity of the euro-area. The problems in Europe affect commodities negatively as the European Union is one of the world’s largest importers of raw materials. Additionally, Europe’s woes make the dollar stronger, putting additional pressure on commodity prices.

The Standard & Poor’s GSCI Spot Index of raw materials slipped 0.1 percent today. The MSCI All-Country World Index of shares reached the lowest level since January.

Gold slumped from $1,693.70 to $1,593.70 per ounce today on COMEX as of 23:48 GMT and the intraday low of $1,591.40 was the lowest since January 3. Copper went down from $3.6940 to $3.6715 per pound today. Futures for delivery rubber in October declined as much as 4 percent to $3,662 per metric ton on the Tokyo Commodity Exchange.

Commodities declined today, threatening to erase this year’s gains, as the problems continue to haunt Europe. Greece is a particular concern, being the most indebted member of the European Union. The country failed to form the government after the election on the weekend, fueling fears that Greece may leave the eurozone. The Standard & Poor’s GSCI Spot Index dropped for the fifth consecutive day.

Crude oil had its own bear story on top of Europe’s woes as Saudi Arabia signaled that prices for the commodity are high. Saudi Arabian Oil Minister Ali al-Naimi said that the prices are “still a little bit high”. Such comments are likely mean that the world’s biggest oil exporter is going to boost its production.

June futures for delivery of crude oil slipped $0.93 (0.9 percent) to $97.01 per barrel on NYMEX. Brent fell from $113.33 to $110.53 per barrel before trading at $113.14 as of 21:05 GMT today on ICE. Gold dropped from $1,636.70 to $1,604.00 per ounce on COMEX today, reaching $1,596.00 intraday — the lowest settlement since January 4. Sugar tumbled from $0.2105 to $0.2033 per pound on ICE, while the daily minimum of $20.31 was the lowest since September 1, 2010.

Gold and other precious metals retreated today as positive market sentiment decreased demand for safer assets. The Standard & Poor’s 500 Index of stocks jumped as much as 1.2 percent, showing that traders were willing to risk.

Institute for Supply Management reported that US manufacturing Purchasing Managers’ Index rose from 53.4 in March to 54.8 in April. Analysts predict that reports this week will show that US employment grew with faster pace. The report of China Federation of Logistics and Purchasing showed that China’s manufacturing PMI advanced from 53.1 to 53.3.

Demand for safety of precious metals may yet return as problems in Europe continue to have an adverse impact on the global economy. Yesterday’s report about a recession in Spain trimmed optimism among investors. Political struggle in France doesn’t help traders’ sentiment either.

Gold slipped from $1,665.00 to $1,663.30 per ounce as of 20:23 on COMEX today, erasing earlier advance to $1,670.50. Silver declined from $31.05 to $30.93 per ounce and palladium went down from $682.35 to $680.05 per ounce today.

Crude oil futures advanced today as growth of US household spending overshadowed slower-than-expected economic growth. US gross domestic product rose 2.2 percent in the first three months of 2012, compared to expectations of a 2.6 percent increase. Personal expenditures increased 2.9 percent in the first quarter of this year, up from 2.1 percent in the previous quarter. The average forecast was 2.3 percent. Crude oil contract for June delivery rose $0.38 cents to $104.93 per barrel on NYMEX, the highest price since April 2, while over the week prices were up 1.8 percent. Brent oil advanced from $119.58 to close at $119.70 per barrel today on ICE.

Gold price rose today as central banks and hedge funds boosted their purchases of the precious metal. The International Monetary Fund reported that Mexico, Russia and Turkey expanded their reserves by 44.8 metric tons valued at $2.4 billion in March. Prices for gold rose as Federal Reserve Chairman Ben Bernanke stated that the Fed will continue to stimulate the US economy. The comments weakened the dollar, bolstering raw materials. Many analysts believe that gold would gain next week. Gold spot prices increased by $$4.40 to close at $1,664.00 per ounce today on COMEX.

Cattle futures climbed today, following yesterday’s drop. Futures fell yesterday after a case of bovine spongiform encephalopathy (or simply mad cow disease) was discovered in the United States. Four biggest importers of US meat (Canada, Japan, Mexico and South Korea) said that they will continue to buy US beef, causing prices to rebound today. Live-cattle futures for delivery in June rose as much as 1 percent to $1.12675 per pound as of 11:01 on CME, following yesterday’s drop by the exchange’s 3-cent limit to $1.11575.

Crude oil advanced today after the Federal Open Market Committee said that the US economic recovery will gradually accelerate over time. The FOMC left the monetary policy unchanged today and said in the statement that it “expects economic growth to remain moderate over coming quarters and then to pick up gradually”. US crude oil inventories increased by 4.0 million barrels, while total motor gasoline inventories decreased by 2.2 million barrels last week. June futures for delivery of crude oil advanced $0.84 (0.8 percent) to $104.39 per barrel by 13:33 on NYMEX, while earlier it reached $104.57, the highest level in a week. Brent crude climbed from $118.33 to $119.08 per barrel as of 18:33 GMT on ICE today, while earlier it declined to $117.45.

Gold fell as demand remained low despite the festival in India that is considered to be a good time to buy precious metals. The uncertain political situation in France and Netherlands also damps demand for the metal. On the other hand, data shows that central banks across the world continue to buy gold for expanding their reserves. Gold price fell from $1,641.30 to $1,629.90 on COMEX today.

Gold advanced as traders continued to speculate that the Federal Reserve may stimulate the US economy. The poor payrolls last week have set markets in risk aversion mode, hurting most commodities, but benefiting precious metals. The 
Standard & Poor’s GSCI Spot Index of raw materials fell as much as 1.5 percent yesterday. Gold was up from $1,649.00 to $1,659.20 per ounce on COMEX yesterday, before opening at $1,654.70 today.

Soybeans reached the new high this year on the forecast of rising demand in China. The Asian country posted an unexpected trade surplus, reducing fear of the economic slowdown. Yet debt problems in Europe and the poor employment data in the United States trimmed optimism. Some analysts said that the expected demand from China doesn’t warrant the current high price. Soybeans reached $14.5225 yesterday on CBoT, the highest level since August 31.