Precious metals tumbled on Wednesday as Fed meeting resulted in absence of significant changes in the current monetary policy. Moreover, strengthening US Dollar and weaker global equities weighted down on the commodity group.
Gold attained one-week low after upbeat ADP non-farm employment data. However, news that the US manufacturing sector continued to contract in July provided slight support for the yellow metal.
Silver came under heavy selling pressure, plunging by 2% as investors were disappointed by lack of additional easing measures from the Fed.
Platinum lost 1.19% on weak quarterly results of world’s major producers. On Wednesday, Zimplats reported a 52% decline in operating profit in Q2.
Palladium followed base metals, tumbling by 1.09%. Dismal manufacturing data releases from the US, China and EU pressurized the metal’s price.
Industrial Metals: Zinc sank on weak PMI data
Base metals plunged on Wednesday amid weak manufacturing data releases across the globe. US manufacturing sector activity declined to 49.8 while experts predicted the PMI to approach 50.3. Meanwhile, euro-area PMI contracted to three-year low of 44 last month.
Aluminum dropped on bleak PMI data from the EU and US. Additionally, high China’s aluminum output weakened the light metal further.
Copper tumbled after the Fed refrained from additional monetary stimulus measures. Stronger greenback also sent the red metal lower.
Nickel was the top-loser as market continues to remain in surplus. Moreover, global manufacturing activity contraction added pressure on the metal.
Zinc sank despite slightly lower inventories. However, dismal demand prospects continued to limit any gains of the industrial metal.
Energy: Heating oil gained after US supplies data
Energy commodities apart from natural gas moved higher on Wednesday as market participants hoped for easing from the Eurozone. However, gains of the commodity pack were partly capped by weak PMI data and lack of monetary stimulus from the Fed.
Crude oil went up after the EIA reported that US crude oil inventories declined much more than expected last week.
Brent oil was bullish as traders turned to Europe for policy easing after Fed disappointed the market announcing no changes in the current monetary policy.
Natural gas extended previous decline, dropping by 1.18%. Sending the commodity lower, the EIA reported that natural gas production hit four-month high in May.
Heating oil rose after US supplies data indicated further decrease in inventories. Currently, US distillate fuel inventories are below the lower limit of the average range for this year period.
Agriculture: Corn retreated as China’s imports slow down
Farm commodities, excluding coffee, dropped on Wednesday on broadly stronger US Dollar and lack of easing measures from the Fed. Long-awaited rains in US also pushed rural commodities lower.
Wheat was the top-loser, falling to one-week low amid signs that US spring crop yields may rise after rains. However, reports that Russia’s output is likely to fall by more than 16% this year limited losses of the commodity.
Corn lost almost 0.6% as recent jump in prices started to weight on China’s imports. Meanwhile, Chinese government is preparing to sell state reserves to lower corn prices.
Sugar retreated despite the worst drought in India in the last three years. Unfavorable weather conditions are hurting sugar harvest and may force the government to impose export restrictions.
Coffee was the only gainer despite weak fundamentals. Brazilian weather improved while weak economic state worldwide may impact consumption.
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 wheat 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
