Commodity Blog

Posts Tagged ‘COMEX’

Copper, oil and gold advanced as good news from Europe and the United States bolstered commodities. Oil also rose on the speculation that the US inventories declined.

The European Union pledged €150 billion to the International Monetary Fund that the IMF will use to help in the battle with the region’s sovereign-debt crisis. The German Business Climate index unexpectedly increased to 107.2 in December from 106.6 in November, while analysts predicted it to drop to 106.2. Spain sold its three- and six-month bills at an auction yesterday, exceeding its maximum target.

The US housing starts increased from 627,000 to 685,000 and the building permits rose from 644,000 to 681,000 in November.

February futures for crude oil delivery advanced $3.19 to $97.24 per barrel on NYMEX. Brent oil was at $107.15 per barrel today as of 3:11 GMT on ICE after jumping from $104.30 to $107.00 yesterday. Gold advanced from $1,615.50 to $1,620.20 per ounce today on COMEX, following yesterday’s rise from $1,596.40 to $1,615.00. Copper traded near its opening level of $3.3720 per pound today, while the metal climbed from $3.3230 to $3.3640 yesterday.

Gold attempted to rally yesterday, but failed. The Federal Reserve refrained from adding stimulus during its monetary policy meeting on December 13. The decision was bad for gold as the QE3 would result in a weaker dollar that could boost the precious metal. Much of the previous strength of gold was derived from the continuous attempts of the developed nations to weaken their currencies.

The dollar was still weaker yesterday as the fundamental reports from the United States were good for the most part and gold attempted to profit from that. Alas, without much success. The good fundamentals are a mixed blessing for the yellow metal. Good macroeconomic data results in less demand for a safe haven, leading to a weaker dollar, but also less need for gold as a refuge.

Gold opened at $1,571.50 per ounce, rallied to $1,592.80 and closed at $1,573.40 on COMEX.

The start of this week was an unpleasant one as most commodities took a great hit as concerns about Europe reemerged. The main reason for the pessimism was the warning from Moody’s Investor Service that it may downgrade the credit ratings of the eurozone countries. The European leaders attempted to address the problems during the summit on the last Friday, but the implications of the meeting will be felt over a longer term, not in an immediate future, so the rating agency wrote:

But in the absence of policy initiatives in the near future that stabilise credit market conditions effectively, Moody’s believes that the system remains prone to further shocks, which would likely lead to selective rating changes. As a result, Moody’s intention remains to revisit sovereign ratings of euro area and EU countries during the first quarter of 2012.

The Standard & Poor’s GSCI index of 24 commodities fell as much as 1.3 percent to close at 638.93 after earlier it reached 636.8, the lowest level since November 25.

Gold slumped from $1,707.50 to $1,663.90 per ounce on COMEX yesterday and traded today at $1,654.70. Silver slipped from $31.76 to $31.25 on the previous trading session. Copper was down from $3.5045 to $3.4460 per pound and traded today near $3.4435. Brent crude rose from $107.23 to $107.50 per barrel today on ICE after yesterday’s drop from $108.75 to $107.11 per barrel.

Commodities, including copper and oil, gained today on good news from Europe and the United States. The European politicians discussed on today’s summit ways to resolve the region’s debt problems and announced a range of measures, including leverage for the temporary bailout fund and an implementation of more permanent stability mechanism next year. The US consumer confidence improved this month, according to the preliminary estimate of the University of Michigan.

Agricultural commodities, specifically corn, soybeans and wheat, haven’t joined the rally as the US Department of Agriculture boosted its forecast for the next year’s inventories. The outlook for the global stockpiles of corn was 4.6 percent higher than in the previous estimate, for soybeans 1.5 percent higher and for wheat 2.9 percent above the previous forecast.

January futures for delivery of crude oil advanced $1.07 to $99.41 per barrel on NYMEX, while Brent jumped from $107.78 to $108.68 per barrel today as of 21:48 GMT on ICE. Copper rallied from $3.4720 to $3.5560 per pound on COMEX. Corn fell from $5.8900 to $5.8500 per bushel, soybeans slumped from $11.3100 to $11.0575 and wheat traded near its opening price of $5.7675 after falling to $5.6775 today on CBoT.

Commodities slumped yesterday after the European Central Bank signaled that it’s not going to expand its bond purchases. The central bank took steps for helping the eurozone by lowering its main interest rate by 25 basis points and it also announced measures to support the bank lending and money market activity. But market participants were disappointed as they were hoping for more involvement from the ECB.

It’s not surprising to see commodities like oil and copper among the losers, but gold again unpleasantly surprised gold bulls. Analysts again named fears of deflation as a reason for the bearishness of gold. The previous high prices of the precious metal were caused by the expectation that central banks would start printing money, inflating the financial system. The ECB still refuses to do so and it doesn’t look like the US Federal Reserve is going to announce a quantitative easing anytime soon. That was a great disappointment for gold.

Brent crude oil traded at $108.07 per barrel today as of 2:00 GMT on ICE, following yesterday’s slump from $109.60 to $107.55 per barrel. Gold was near $1,711.90 per ounce on COMEX today after on the previous trading session it dropped from $1,742.0 to $1,707.90 per ounce. Copper slid from $3.5500 to $3.4755 per pound yesterday.

Gold fell today, following yesterday’s advance, as the optimism for the eurozone again emerged. The European Central Bank will hold the monetary policy meeting today and many analysts believe that the Bank will cut its interest rates to reduce the pressure on the most indebted economies of the European Union. The precious metal rallied yesterday as France and Germany again showed disagreement in their approaches to battling the debt crisis. Gold was down today from $1,742.00 to $1,737.70 per pound as of 3:04 GMT on COMEX, following the advance from $1,730.60 to $1,741.00 per pound yesterday.

Oil hasn’t profited from the reemergence of the optimism as the US crude oil inventories unexpectedly rose last week. The stockpiles grew 1.3 million barrels to 336.1 million barrels. Forecasters predicted a decline by 800,000 barrels. January futures for delivery of crude oil rose $0.19 to $100.30 per barrel in electronic trading on NYMEX. Brent was down from $109.60 to $109.35 today on ICE after it fell from $110.70 to $109.50 yesterday.

Copper fell today as Standard & Poor’s warned that it put the credit ratings of 15 countries of the Eurozone on review with negative implications. The rating agency provided various reasons for such decision, including the indecisiveness of the European policy makers and the growing risk of a new recession. The announcement wiped out the positive sentiment from markets.

And the market sentiment was positive earlier. France’s and Germany’s leaders has met to discuss the possible changes to the European Union treaties, aiming for stronger fiscal integration. Such talks made way to hopes that the summit on December 9 will bring some solid plans to resolve the Eurozone debt crisis. But the prospects for the European credit ratings downgrade erased the optimism.

Copper price was down today from $3.5400 to $3.5135 per pound as of 1:44 GMT on COMEX. The metal was up from $3.6000 to $3.6200 per pound yesterday before falling to the closing price of $3.5440.

Copper fell as China’s manufacturing slowed. According to the HSBC/Markit report, China’s manufacturing declined in November with the fastest pace since March 2009. The Purchasing Managers’ Index dropped from 51.0 to 47.7 last month, the lowest level in 32 months.

The industrial metal may still rebound on the optimism about Europe and the positive economic data from the United States. The US manufacturing PMI rose from 50.8 to 52.7 in November, while the construction spending advanced 0.8 percent, two times the forecast value.

Copper traded at $3.5315 per pound today as of 4:51 GMT on COMEX, following the yesterday’s drop from $3.5560 to $3.5255 per pound.

Copper advanced as the sentiment about the situation in the European Union improved, boosting prospects for raw materials. Analysts are worried, though, that the optimism may be short-lived.

There’s the speculation that the International Monetary Fund prepared a loan to Italy. The officials denied the rumors, but traders felt their mood improving. In general, Monday was a day of ”risk-on mode” and most of commodities rallied.

Unfortunately for traders, there are many reasons for the rally to be short-lived. Moody’s Investor Service warned that the indecisiveness of the European leaders may lead downgrades for the credit rating of the European countries. The rating agency wrote:

The continued rapid escalation of the euro area sovereign and banking credit crisis is threatening the credit standing of all European sovereigns, cautions Moody’s Investors Service in a new Special Comment. In the absence of policy measures that stabilise market conditions over the short term, or those conditions stabilising for any other reason, credit risk will continue to rise.

Futures for delivery of copper in March rose as much as 2.7 percent to $3.3715 per pound by 13:14 on COMEX.

Both copper and gold performed in a similar manner in the recent past, but the outlook for the metals is vastly different. Traders are bullish on gold, but bearish on copper. Why is that?

There is actually a single reason for such different expectations: the European debt crisis. The borrowing costs of the European nations continue to rise, while the credit ratings of Europe’s countries continue to be downgraded by rating agencies. That’s unfavorable environment for industrial metals, but a blessing for precious metals.

So why gold doesn’t look like it’s “blessed”? There are different theories on this matter, but two of them sound most logical. Firstly, the crisis makes investors to run to the dollar and gold suffers from that as it’s inversely correlated to the greenback. Secondly, demand for the yellow metal an inflation hedge wanes as the slowing global economy means slower inflation growth.

Gold closed at $1,681.00 per ounce today on COMEX after opening at $1,693.80. Copper fell to the closing price of $3.2680 per pound from the opening of $3.2730.