Precious Metals: Palladium dips on looming US debt ceiling debates

Precious metals continued a bearish trend on Monday despite broadly weaker US Dollar and hopes that the Fed will keep its loose monetary policy in place amid weakness of the labour market. Creating heavy pressure on the commodity group, investors remained cautious ahead of the ECB press conference due on Thursday.

Gold declined despite easing concerns that the Fed will stop its stimulus measures well before December 2013. The yellow metal may seek further support from rising holdings of the central banks across the globe.

Silver moved in sync with gold as market players remained jittery ahead of the ECB press conference and looming debates over lifting the US debt limit.

Platinum slumped but losses were limited due to expectations that the Fed will continue its easing program in the nearest term.

Palladium was the top-loser amid mounting uncertainty over the US debt ceiling talks. However, the metal may witness gains in the medium term as supply constraints coupled with growth of the global automobile industry may create an upward pressure on prices.


Industrial Metals: Zinc slides as global surplus weights

Industrial metals apart from aluminum moved lower on Monday as market sentiment remained under notable pressure amid upcoming US debt limit dispute. Moreover, investors were cautious ahead of the ECB press conference due on Thursday. Elevated LME inventories and global demand insecurity also weighed on base metals.

Aluminum was the top-performer amid weaker US Dollar. However, a record-high LME inventories of 5.24 million tonnes capped gains of the light metal.

Copper eased 0.17% on lingering concerns over the US debt ceiling talks. Moreover, profit-taking after a sharp increase in prices on US fiscal deal also added to losses of the red metal.

Nickel slid on persistent surplus on the physical market and elevated LME inventories. Rising production in Indonesia also sent the metal lower.

Zinc prolonged its slump amid excessive supply on the physical markets. International Lead and Zinc Study Group reported the global zinc surplus attained 157,000 tonnes in the first ten months of 2012.


Energy: Heating oil leads gains on colder weather forecasts

Energy futures except for natural gas rebounded on Monday, being supported by weaker greenback. Boosting oil prices, expansion project of the Seaway Pipeline is expected to start pumping about 400,000 barrels per day to Cushing compared to original capacity of 150,000 barrels per day. Meanwhile, bottom fishers took advantage of a recent decline in prices on fears that US debt limit dispute may hurt US economy.

Crude and Brent oil rose amid soft US Dollar and expectations that an increase in the Seaway Pipeline capacity will cut excessive supplies. Additionally, a recent decline in the US crude oil inventories continued to lend support.

Natural gas was the only-loser after a previous rally amid larger-than-expected withdrawal last week. At the same time, natural gas may be lifted by updated weather forecasts showing colder-than-normal temperatures in the most US territory later in January and in the beginning of February.

Heating oil advanced, tracking strength of Brent and crude oil. Colder weather forecasts across the US as well as below average US inventory levels pushed the heating oil prices higher.


Agriculture: Coffee rallies on funds’ rebalancing

Rural commodities were bullish on Monday amid worries over US crops and broadly softer US Dollar. Moreover, an expected increase in index funds holdings of the 2012 top laggards spurred rally of softs. Meanwhile, the investors’ focus remained on this Friday’s USDA report on global supply and demand estimates.

Wheat climbed on speculation that unfavorable weather conditions are weighting on US winter crops. As much as 25% of the hard red winter wheat may be lost after severe drought in 2012.

Corn bounced off a six-month low on signs that US reserves are approaching the lowest level in nine years after last year’s drought. Experts predict USDA report scheduled on Friday to show that corn stocks dropped 15% as for December 1.

Sugar inched up on hopes that index funds will increase their sweetener’s holdings. Investors are likely to purchase 31,451 contracts of sugar due to weighting shift of S&P GSCI and Dow Jones-UBS Commodity gauges.

Coffee rallied the most in the group, being boosted by expectations that index funds will buy as much as 11,148 lots of Arabica coffee as a part of their rebalancing plan.


EXPLANATIONS

Commodities

  • Gold - spot 995 fine gold

  • Silver - spot 999 fine silver

  • Platinum - spot platinum with minimum purity 99.95%

  • Palladium - spot palladium with minimum purity 99.95%

  • Aluminium - three-month forward contract on the London Metal Exchange

  • Copper - three-month forward contract on the London Metal Exchange

  • Zinc - three-month forward contract on the London Metal Exchange

  • Nickel - three-month forward contract on the London Metal Exchange

  • Crude oil - light, sweet crude oil active contract on the New York Mercantile Exchange

  • Brent oil - Brent oil active contract on the New York Mercantile Exchange

  • Natural Gas - natural gas active contract on the New York Mercantile Exchange

  • Heating oil - heating oil active contract on the New York Mercantile Exchange

  • Sugar - white sugar active contract on the Chicago Board of Trade

  • Wheat - wheat active contract on the Chicago Board of Trade

  • Coffee - benchmark Arabica coffee active contract on the NYB-ICE Futures Exchange

  • Corn - corn active contract on the Chicago Board of Trade

Indices

  • Dow Jones - UBS Precious Metals Subindex Total Return - commodity group subindex composed of gold and silver; the index reflects return on underlying commodity futures price movement

  • Dow Jones - UBS Industry Metals Subindex Total Return - commodity group subindex composed of futures contracts on aluminium, copper, nickel and zinc; the index reflects return on fully collateralized futures positions

  • Dow Jones - UBS Energy Subindex Total Return - commodity group subindex composed of futures contracts on crude oil, heating oil, unleaded gasoline and natural gas; the index reflects return on fully collateralized futures positions

  • Dow Jones - UBS Agriculture Subindex Total Return - commodity group subindex composed of futures contracts on coffee, corn, cotton, soybeans, soybean oil, sugar and wheat; the index reflects return on fully collateralized futures positions

Chart

  • SMA (20) - Simple Moving Average of 20 periods

  • SMA (60) - Simple Moving Average of 60 periods

  • Correlation - a statistical measure of the linear relationship of two random variables. It is defined as the covariance divided by the standard deviation of two variables

Indicators

Daily Ranked Price Moves - daily price changes in an ascending order for positive changes and in a descending order for negative or mixed changes

Monthly Ranked Price Moves - monthly price changes in an ascending order for positive changes and in a descending order for negative or mixed changes