Precious Metals: Silver plunges after weak US jobs data

Precious metals followed risk-on assets on Thursday after the US data showed jobless claims increased more than expected last week. Moreover, profit taking after the previous rally weighed on the commodity sector. At the same time, weak greenback capped losses of precious metals complex.

Gold declined as US figures continued to disappoint. The yellow metal moved in sync with risky assets that posted sharp losses after US jobless claims data. However, a recent Fed’s decision to stick to its loose monetary policy as well as robust demand from central banks lent support to gold prices.

Silver was the top-loser, tracking gold’s and base metal’s weakness. On Thursday, investors locked in gains as the grey metal soared in the previous sessions on increasing demand for silver coins in the US. The US Mint reported sales of silver coins in January surged 84% on a monthly basis.

Platinum and Palladium slumped as disappointing US data erodes industrial demand prospects for the metals. Restricting the downswing, experts predict wider deficit on the global physical markets due to tight supplies from South Africa and Russia.

Industrial Metals: Copper slumps ahead of China's PMI

Base metals declined on Thursday as dismal US numbers dampened market sentiment. Elevated LME stockpiles and China’s demand uncertainty added pressure on base metals. However, easing measures by the Fed coupled with hopes for upbeat China’s PMI reading due on Friday limited the downswing.

Aluminum plunged as markets have already priced in expectations of narrower surplus on physical market due to production cuts by BHP Billiton and Rio Tinto.

Copper tanked amid flow of weak data from the US and Japan. Moreover, rising production in Chile, Africa and China as well as global demand uncertainty created heavy pressure on the red metal.

Nickel declined on global oversupply concerns. The latest report of Nickel Study Group indicated global markets were in surplus of 68,000 tonnes in the period between January and November 2012.

Zinc followed bearish trend despite hopes for strong investment demand from China. The base metal came under notable pressure from persistent supply glut and record high LME stocks.

Energy: Brent oil climbed on weak US Dollar, geopolitical tensions

Energy futures apart from crude oil moved higher on Thursday amid broadly weaker US Dollar and optimism over continuation of Fed’s growth-boosting measures. At the same time, gains were capped by weak US data suggesting the recovery of the world’s top economy is slowing down.

Crude oil was the only loser after the data showed larger-than-expected increase in jobless claims last week. Adding pressure on the commodity, the EIA report indicated US crude oil stockpiles soared more-than-expected last week.

Brent oil posted a mild gain amid weaker greenback and hopes the Fed’s measures will revive US economy thus boosting energy demand. Brent oil also continued to draw strength from geopolitical tensions between Libya and Algeria.

Natural gas climbed despite bearish EIA report. US natural gas inventories tumbled by 194 billion cubic feet last week, compared to a forecast of a 202-billion-cubic-feet decline. Warm weather forecasts also weighed on natural gas.

Heating oil continued to rise on concerns over low US stockpiles. The latest EIA report showed distillate fuel stocks slumped by 2.3 million barrels last week and stood more than 40% below the average range for the current period of the year.

Agriculture: Corn edged up despite better weather in Argentina

Farm commodities were mixed on Thursday amid weak risk appetite after dismal data from the US and Japan. Signs of soft demand for US exports and improving weather conditions in Argentina also pressurized the commodity complex.

Wheat was the top-loser after the USDA report signaled US export sales tumbled 40% in the week ended January 24 compared to the previous week. Limiting the downswing, the USDA now expects Argentina’s crop to reach 11 million tonnes compared to Argentina’s government estimate of 15.45 million tonnes.

Corn inched up despite weak US export data. Corn exports approached 252,000 tonnes, the lower range of analysts’ forecasts. Adding pressure, Argentine is expected to witness rains that may improve prospects for drought-stricken crops.

Sugar advanced on speculation the sweetener’s output may fall for the first time since 2009 as farmers across the globe reduce plantings after the largest price decline since 1999. Global output is likely to attain 165 million metric tonnes in 2013-14, compared to 172.3 million metric tonnes in 2012-13.

Coffee declined despite concerns over spreading coffee leaf rust in Central America.

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