Industrial Metals Post Mixed Results on US Jobs Data

Precious Metals Jump on Mixed US Jobs Report

Gold rose on Friday on the back of the mixed US employment report for January that revealed the rate of job creation slowed over the last month, while wage growth increased, which, in turn, supported the outlook for inflation and raised concerns that the Fed might still hike interest rates several times this year. On the Comex division of the New York Mercantile Exchange, gold futures for delivery in April settled at $1,157.80 a troy ounce by the end of Friday’s trade, gaining 20 cents compared to the Thursday’s close of $1,157.60. Over the course of the whole trading week, gold futures managed to tack on, closing 3.7% higher compared to the previous week’s end price and posting the third consecutive week of gains on the Comex. Meanwhile, yellow metal’s is up around 6.03% so far in January amid bolstered safe-haven demand, which was fueled by a slowdown in global growth, heightened volatility and the recent US Dollar weakness. However, the Fed’s rate hike cycle as well as loose monetary policies from the other Central Banks will continue to support traders’ demand for the Greenback, which will in turn be bearish for gold.

Silver futures for March delivery dipped on Friday, settling 7.5 cents, or 0.5%, lower at $14.77 a troy ounce on the Comex division of the New York Mercantile Exchange by the end of trade. On the week, silver prices, however, managed to climb, adding 3.76%.

Platinum dropped at the end of the previous week, with metal’s futures for April delivery falling $3.30, or 0.4%, on Friday to settle at $903 per ounce, however still being able to breach the psychologically important level of $900 for the first time in the recent months. On the week, prices finished 3.36% higher on the New York Mercantile Exchange.

Palladium was at $511.15 an ounce on Friday, down $4.45 from the Thursday's close. Despite this drop, on the week, prices of the metal settled higher, gaining a modest 0.04% on the Nymex.

Industrial Metals Post Mixed Results on US Jobs Data

Aluminum reversed its gains on Friday, pulling back from highs posted on the week, after the news revealed the US economy added less jobs than expected. Metal’s futures for delivery in April shed 2.1% compared to the previous session’s end price, settling at $1,500 a tonne on the London Metal Exchange. Following this downtrend, aluminum did not manage to close the prior trading week higher, posting a weekly decrease of 1.69% mainly on the news from the US coupled with the decline in prices on Chinese overproduction and exports. In the meantime, weak growth in emerging markets continues to dampen prices of the metal, leaving the outlook for the industrial metal uncertain.

Copper futures for delivery in March tumbled on Friday, losing 1.2%, to finish the trading session at $4,630 a tonne on the back of uncertain US jobs report data, that fueled concerns that the first planned rate hike by the Fed might still take place as soon as March, boosting the Greenback ahead of the New Year’s holiday in China. However, on the Comex division of the New York Mercantile Exchange, prices of the red metal managed to add, climbing 1.45% over the course of the prior trading week still based on expectations for fresh monetary policy easing in Asia and Europe. Meanwhile, copper has rebounded already around 7% since it hit six-and-a-half-year lows in mid-January. However, worries over economic uncertainty in China, the world’s biggest copper consumer, continue making traders cut holdings of the industrial metal.

Nickel closed Friday on a down note, finishing 4.4% lower at $8,160 on the LME, as US jobs data weighed. On the week, nickel futures slid 5.41% amid weak demand from China.

Zinc also reversed its gains on Friday, losing 2.2% compared to Thursday’s close and settling at $1,677 a tonne on the LME. As concerns the whole trading week, prices of zinc still rocketed 3%, being the best performer in base metals so far.

Oil Tumbles on Stronger US Dollar

Crude oil finished lower by the close of a volatile week on Friday, as a broadly firmer US Dollar coupled with worries that crude oil oversupply will remain for longer weighed on investors’ sentiment. A week earlier, indications that OPEC and non-OPEC oil producers may come closer to an agreement to decrease production in order to handle one of the most substantial supply gluts in decades caused prices of oil going up. However, last week, on the New York Mercantile Exchange, crude oil futures for delivery in March finished at $31.01 a barrel on Friday, bringing daily drop to 2.25%, as the Dollar index increased to 96.98, off its multi-month lows recorded earlier. Over the course of the whole trading week, Nymex oil futures slid as much as 8.12%, posting the first weekly decline over the past three weeks. Meanwhile, New York-traded crude oil has tumbled nearly 9% since the beginning of the year.

Brent oil futures for delivery in April also slipped by the end of Friday’s trade to settle at $34.13 a barrel on the ICE Futures Exchange, which is down 0.96% on a daily basis. In the previous session, futures posted a jump; however prices did not manage to hold gains, bouncing back below $35 a barrel. For the week, London-traded Brent oil futures declined 5.36%, posting the first weekly decrease in the last three weeks on the back of a stronger US Dollar, which renewed expectations for the first increase in interest rates by the Fed. Meanwhile, Brent prices are already down around 0.5% since the year started.

Natural gas futures continued to spike up, rising on Friday, as indications for colder weather across the US in the next two weeks boosted demand expectations. Despite that, on the Nymex, natural gas futures for March finished the week down as much as 10.23%, even though inventories in the United States fell by 152 billion cubic feet over the last week, missing the expectations for 158 billion drop.

Grains Finish Lower on Lack of Buying Interest

Corn slipped over the course of the previous trading week, being dragged down by a firmer Greenback and weak buying interest from investors’ side. Moreover, weakness in wheat market traditionally continued to undermine prices of corn, while some analysts foresee the US government to raise its outlook for grain reserves on the back of lower-than-expected demand. At the Chicago Board of Trade, the most actively-traded corn futures for delivery in March posted a decline of 2.75 cents, or 0.8%, to settle at $3.65 a bushel by the close of trade on Friday, while during the volatile week prices shed 1.68% compared to the previous week’s end price.

Wheat prices dipped on Friday, being undermined mainly by a drop in corn market paired with a higher US Dollar and a relatively weak buying spree. At the Chicago Board of Trade, wheat futures for delivery in March, the best-traded contract, plunged 6 cents, or 1.3%, to finish Friday’s session at $4.66 a bushel, marking the worst close for a front-month contract since mid-January. Due to these losses, US grain prices slid on the week, finishing the trade 2.61% lower compared to the previous week’s end price at the Chicago Board of Trade.

Soybean prices closed the last trading day of the prior week on a down note, dipping 0.4%, or 3 cents, to settle at $8.70 a bushel by the end of Friday’s trade at the Chicago Board of Trade amid strength in the value of the Greenback along with forecasts for rainfalls in Argentina, rival bean producer. Besides, concerns that the USDA might boost its outlook for US soybean stockpiles added negative sentiment in the market; therefore, on the week soybean futures for delivery in March shed 1.67%.

Raw sugar was the best performer of the last week on the grain market, with the most actively-traded raw sugar futures jumping 0.99% at the Chicago Board of Trade.

EXPLANATIONS

Commodities

• Gold - COMEX active contracted (USD/t o.z.)

• Silver - COMEX active contract (USD/t o.z.)

• Platinum - New York Mercantile Exchange active contract (USD/t o.z.)

• Palladium - New York Mercantile Exchange active contract (USD/t o.z.)

• Aluminum - Active contract of primary aluminum of minimum 99.2% purity at the LME (USD/MT)

• Copper - Active contact of electrolytic copper at the LME (USD/MT)

• Zinc - Active contract of zinc od minimum 99.995% purity at the LME (USD/MT)

• Nickel - Active contract of nickel of 99.8% purity at the LME (USD/MT)

• Crude oil - light, sweet crude oil active contract on the New York Mercantile Exchange (USD/bbl.)

• Brent oil - Brent oil active contract on the ICE Futures Europe (USD/bbl.)

• Natural Gas - natural gas active contract on the New York Mercantile Exchange (USD/MMBtu)

• Heating oil - heating oil active contract on the New York Mercantile Exchange (USD/gal.)

• Wheat - wheat active contract on the Chicago Board of Trade (cents/bu)

• Corn - corn active contract on the Chicago Board of Trade (cents/bu)

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

• Soybeans - active contract on the Chicago Board of Trade (cents/bu)

Indices

• S&P GSCI Precious Metals Total Return Index - commodity group subindex composed of gold and silver; the index reflects return on underlying commodity futures price movement

• S&P GSCI Industrial Metals Total Return Index - commodity group subindex composed of futures contracts on aluminium, copper, lead, nickel and zinc

• S&P GSCI Energy Total Return Index - commodity group subindex composed of futures contracts on crude oil, Brent oil, RBOB gas, heating oil, gas oil and natural gas

• S&P GSCI Agriculture Total Return Index - commodity group subindex composed of futures contracts on wheat, red wheat, corn, soybeans, cotton, sugar, coffee and cocoa

Indicators

Long-term price forecasts - aggregated price forecasts based on predictions of 20 international banks forecasts

USDA Wasde Total Estimated Inventories (Today) - current level of inventories of wheat in 1000 MT, corn in 1000 MT, soybeans in million bushels and green coffee in 1000 bags

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