Precious Metals: Strong China's demand boosts gold

Precious metals rebounded on Tuesday ahead of the closely-watched ECB meeting due on Thursday. Hopes that the Fed will stick to its stimulus measures amid weak state of the jobs market lent support for precious metals. Meanwhile, investors continued to monitor developments across the US debt ceiling talks.

Gold erased some of the previous losses on strong physical demand from China ahead of the festival season. China’s net imports of the yellow metal reached 61,786.6 kilograms in November, the highest level in seven months.

Silver moved higher despite mixed global equities and solid US Dollar. The grey metal drew strength from the gold’s firmness and hopes for continuation of the Fed’s easing measures.

Platinum snapped a three-day losing run amid bright demand prospects from auto industry.

Palladium climbed as demand is exceeding supply for the second consecutive year amid stagnating mines’ output and record high car sales. Demand is likely to exceed production by 511,000 ounces this year, reported Barclays.

Industrial Metals: Aluminum rises on brighter China’s demand outlook

Industrial metals apart from zinc went higher despite weak data from the Eurozone. German factory orders dropped 1.8% in November compared to a forecast of a 1.4% decrease. However, expectations of strong China’s data due on Thursday supported base metals.

Aluminum jumped on positive outlook on global demand. Alcoa predicts global aluminum consumption to grow 7% in 2013 as economic recovery in China drives demand for cars, cans and office equipment.

Copper rose despite elevated LME stocks. Inventories at the LME warehouses surged to the highest mark in 11 months, raising worries over physical demand for the red metal. LME stockpiles added 2.5% on Monday, approaching 327,371 tonnes, the highest level since February.

Nickel led gains, jumping 0.67% on hopes for robust demand from China. However, bloated LME inventories and oversupply on the physical market pushed the metal down.

Zinc was the only loser as high LME stocks created heavy pressure on the metal. LME inventories continued to hover near 17-year high on Tuesday.

Energy: Crude oil slides as investors bet on increase in US stocks

Energy futures were mixed on Tuesday amid expectations of the US inventory buildup this week. Firmness of the US Dollar and dismal economic reports from the Eurozone also pushed energy prices lower. Moreover, concerns over looming debt limit dispute in the US added to losses of the commodity group.

Crude oil eased as investors bet on an increase in the US crude oil stockpiles. Experts expect the EIA to report a 0.9-million-barrel increase in the US crude oil stocks last week compared to a 11.1-million-barrel drop in the preceding week.

Brent oil climbed on expectations that an increase in the Seaway Pipeline capacity will cut excessive supplies. However, firm US Dollar and uncertainty surrounding US debt limit talks weighted on the commodity futures.

Natural gas plunged amid controversial weather forecasts. A National Weather Service and WSI expect below normal temperatures in the most US territory while MDA Weather Services predicts warmer weather in the next two weeks.

Heating oil rallied for the second consecutive session as US inventories stood below average level last week. However, uncertainty over US heating demand and solid greenback capped gains.

Agriculture: Wheat dips ahead of USDA monthly supply report

Farm commodities, excluding corn, finished Tuesday’s session in the red territory, being pressured by solid US Dollar. Increased caution ahead of the USDA monthly report on global supplies also weighed on rural commodities.

Wheat edged lower ahead of the key USDA report due on Friday. However, the grain may seek support on US winter crop concerns and lower Argentina’s harvest. Argentina’s northeastern province of Entre Rios lost about 50% of its wheat harvest because of heavy rainfalls.

Corn was the only gainer, advancing for the second consecutive session on speculation that the USDA is likely to cut its harvest forecast due to severe drought last year.

Sugar dropped amid oversupply on the market. However, index funds’ rebalancing may provide support in the next sessions.

Coffee tumbled as investors turned to ample supplies from the world’s the top and the second biggest producers, Brazil and Colombia. Brazilian Arabica coffee production may attain 50 million bags in 2013 despite low-yielding cycle. In 2012 Brazil harvested 50.8 million bags.

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