Goldman Sachs reduced its growth estimates for the world economy and forecast recessions in Germany and France.

Moody’s Investor Serviced cut Italy’s credit rating to A2 with a negative outlook from Aa2, citing:

The main drivers that prompted the rating downgrade are:

(1) The material increase in long-term funding risks for euro area sovereigns with high levels of public debt, such as Italy, as a result of the sustained and non-cyclical erosion of confidence in the wholesale finance environment for euro sovereigns, due to the current sovereign debt crisis.

(2) The increased downside risks to economic growth due to macroeconomic structural weaknesses and a weakening global outlook.

(3) The implementation risks and time needed to achieve the government’s fiscal consolidation targets to reverse the adverse trend observed in the public debt, due to economic and political uncertainties.

The Standard & Poor’s GSCI index declined 1.6 percent.

Gold fell from $1650.40 to $1596.60 per ounce as of 22:51 GMT today on COMEX, following the jump to the daily high of $1675.50. Copper dropped from $3.0955 to $3.0775 per pound. Palladium declined from $586.70 to $569.50 per ounce.
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The industrial and precious metals, except for gold, continued to fall today, even after a surprising and very positive unemployment report from the United States. The silver declined for a second day, reaching a 3-week low vs. the US dollar.

It looks like the investors favor gold as the most risk-free commodity, leaving silver, platinum and the industrial metals behind, not willing to re-open their long positions in those markets. The crude oil joined gold in its recovery but mainly due to the natural demand for fuel.

Meanwhile, many market analysts suggest closing out the long gold positions, as they do not expect the new highs any time soon. If the speculators will leave gold, and won’t enter the stock markets with those money, they might choose silver or some other less overbought but liquid commodity.

Silver fell from $38.89 to $37.97 per troy ounce or almost 2.4 percent as of 17:56 GMT on the spot market today; it reached its daily low at $37.53 — the minimum level since July 13.
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Copper gained on the weakening dollar and the recovery of the U.S.economy. U.S. retail sales rose in March more than forecast, signaling about the widening economic rebound. The U.S. currency dropped versus the basket of the six major currencies, making commodities more appealing as an inflation hedge. May futures for copper delivery gained $0.0075 (0.2 percent) to $3.608 per pound by 12:10 on NYMEX.
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Copper prices went up after the euro rebounded versus the dollar, boosting appeal of the metal as a hedge against inflation. The euro gained as much as 0.5 percent. Inventories of the LME-monitored copper dropped 0.3 percent, supporting the metal’s price. Delivery for copper in three months went up $47 (0.6 percent) to $7,418 per metric ton by 17:44 on the London Metal Exchange.
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Copper prices slipped after the dollar gained, diminishing the demand for most metals as an inflation hedge. Prices also fell on concern that demand from China, the largest consumer of the metal in the world, will wane on increasing interest rates. May futures for copper delivery slipped $0.0225 (0.7 percent) to $3.3955 per pound in New York.

Prices for cotton may rise as China, the largest cotton importer, may increase purchases of the fiber 30 percent in 2010. Analysts say that imports may total more than 2 million metric tons, compared 1.53 million tons in the previous year. May delivery for cotton rose 0.3 percent to $0.8137 per pound on ICE.
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Copper climbed to the two-week high as the weaker dollar boosted demand for commodities as an inflation hedge. Price also jumped as inventories of LME-monitored copper dropped to 528,050 metric tons, the lowest level since January 20th. Delivery for copper in three months climbed $108 (1.5 percent) to $7,413 a metric ton as of 17:59 on the LME.

Cocoa price slipped to the seven-month low on speculation that growing supplies will decrease demand. Hedge-funds and other speculators cut their bets on increasing prices by 21 percent in the week ended March 9th. May futures for cocoa delivery slipped $18 (0.6 percent) to $2,848 per metric ton on ICE.
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There are voices supporting optimistic outlook for copper price. They are speculating about global economic recovery, supporting demand for the industrial metal. Data from the U.S., one of major copper consumer, about expanding economy especially supports optimism for copper performance, as healthy economy and decreasing jobless rate lead to more housing construction and, as a result, more copper demand. Reports about dwindling stockpiles of LME-monitored copper also can result in price increase. LME-monitored inventories of copper dropped to almost 540,000 metric tones, lowest amount since early February.

But many analysts are inclined to pessimistic view on copper ability to rise or even maintain current price level, some even were going as far as calling current price level “a bubble”. They point out that key reason for the metal’s outstanding performance was huge amount of copper imported by China, one of the world’s greatest consumer, causing copper price to double in 2009. In 2010 it turned out that China imported more copper than it really requires. And it seems that suggestion about demand for the metal rebounding after New Year holidays in China did not prove true. There is also concern that economic recovery may be slow and supply may exceed demand. Earthquake in Chile caused price surge at first but, while being harmful for copper output, didn’t affected copper production as strong as was expected.

So, how can we predict copper moves amid such uncertainty? First answer lies in the very nature of copper as industrial metal. Copper is tied very strongly with overall economical picture, so the world economy can suggest possible copper moves. If economy will continue to rebound, then copper will continue to go up. Another factor worthy consideration is a dollar. Commodities, including copper, are very dependent on the U.S. currency these days, so look for the greenback performance for suggestion where commodities may be heading. It’s also looks like copper performance is strongly correlated with the stock market, so you can plan your trade if you can predict where the stock market is heading.
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China, the largest buyer of copper in the world, decreased import after record purchases in 2009 as local smelters restarted production. Aluminum smelters in China, the largest producer of the industrial metal, resumed 5 million tons per annum of idled capacity in past year as profit margins improved with increasing prices. China’s purchases of refined aluminum dropped to 40,059 metric tons in January from 42,106 tons in December as the nation have ample inventories after it have bought more metal than necessary on outlook for a demand recovery.

Delivery for aluminum in three months rose 0.3 percent to $2,225 per ton by 15:57 on the London Metal Exchange. The price has reached previously a 15-month high.
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Yet there are some factors that can support the metal’s price. Commodities’ prices may go up as U.S. economy advanced at a 5.9 percent annual rate in the fourth quarter, the greatest pace in six years. Chile earthquake boosted the base metals prices, possibly pushing other commodities up. Africa’s biggest gold mines may halt due strikes, decreasing supply of the precious metal.

April futures for gold delivery fell $1.20 (0.1 percent) to $1,117.70 per ounce by 11:28 on the Comex division of the New York Mercantile Exchange. Immediate delivery for gold was at $1,117.30 in London.
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Wheat futures fell in Paris on speculation that rising global stockpiles will decrease prices. The U.S. Department of Agriculture reported that global wheat stockpiles will increase from 164 million metric tons a year earlier to 195.9 million tons by the end of May as supply exceeds demand for a second year. Prices may yet go up with farmers’ reluctance to sell at current prices and good European Union exports. March delivery for milling wheat fell 0.4 percent to 125.25 euros ($170.35) per metric ton today on NYSE Liffe.
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Copper prices jumped to the record in 16 months after a strike at the second-biggest mine in the world and as manufacturing in the U.S., China and India increased in December. Last month manufacturing in the U.S. grew at fastest rate in three months. Demand for the metal in China reached a record in the first half of 2009. March futures for copper delivery climbed $0.0505 (1.5 percent) to $3.397 per pound by 11:22 on the New York Mercantile Exchange’s Comex unit.

White sugar price reached the highest level in at two decades in London on concern that flooding in Brazil may harm the crop. Analysts forecast that global sugar production will decline by 13.5 million tons in 2009–2010 season. March delivery for white sugar rose $16.10 (2.3 percent) to $726.30 per metric ton on the Liffe exchange.
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As global economy rebounds so demand for platinum from industries, particularly car industry, grows. Jewelry industry showed astounding 80% growth of demand for the metal. Demand in China is steadily growing, expected to add 900,000 oz.

Will supply catch up demand in the next year? Opinions differ at this matter. Supply from South Africa fell 10.6% in 2009. Production in Russia declined 11% in the previous year. But in 2010 output from these countries can rise in response for growing prices. In other regions production slightly grew. Some analysts predict deficit as demand climbs, while other analysts forecast oversupply.

But even in case of oversupply platinum price may in fact grow due to investor involvement. Platinum ETFs increased 89% in 2009. Analysts say that the commodity will be traded in range $1,100-$1,900 in the next year, $1,350 being the most likely price.
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