Precious metals tumbled on Monday despite hopes that central banks across the world will implement stimulus measures soon. Meanwhile, traders await fresh data from the US due this week.
Gold slid by 0.64% amid soft physical demand from India. Indian gold imports are expected to drop by 30% this year on weak Rupee and drought that curbed households’ income.
Silver lost 1% on mixed global equities. However, broadly weaker US Dollar provided slight support for the white metal.
Platinum declined as oversupply in the market persisted. However, turmoil over Western Platinum restricted the downside. On Monday, Lonmin reported than two people were killed and six injured after illegal work stoppage at Western Platinum.
Palladium was the top-loser on weak performance of the base metals. Meanwhile, HSBC analysts expect palladium market to return to substantial deficit in 2012.
Industrial Metals: Copper sank on demand concerns
Industrial metals retreated on Monday after disappointing Japanese data. Japan’s GDP rose less than expected in Q2, thus denting demand prospects for the base metals. At the same time, global easing speculation continued to lend support for the commodity group.
Aluminum prices decreased after dismal Japanese and Chinese data. Meanwhile, hopes for easing in Asia limited losses of the light metal.
Copper moved lower on global growth concerns. Sending the red metal lower, inventories increased at Shanghai and Comex exchanges.
Nickel edged down on persistent surplus in the market. However, bargain buying opportunities may spur the metal’s price in the next sessions.
Zinc slumped amid weak demand as zinc warrants at LME dropped along with inventories. Recent, dismal data from China continued to create pressure on zinc prices.
Energy: Brent oil advanced on potential supply disruptions
Energy commodities apart from Brent oil declined on Monday despite weaker US Dollar and hopes for easing in the Eurozone, China and US. However, increased geopolitical tensions in the Middle East restricted the downswing of the commodity group.
Crude oil started Monday’s session on a positive note amid potential supply disruptions from Strait of Hormuz. However, crude oil futures halted the bullish trend during US session as investors turned to demand worries.
Brent oil was the only gainer on supply concerns. On Monday, Israel’s news agencies reported that the country is testing a new system for warning people of a missile attack as conflict with Iran may be inevitable in the nearest term.
Natural gas moved closer to seven-week low as cooler weather in the US weighted down on the demand prospects.
Heating oil was flat ahead of the US crude oil inventories data due on Wednesday. Potential supply disruptions from the Middle East supported the commodity price.
Agriculture: Sugar declined as weather in Brazil and India improved
Farm commodities plunged on Monday as beneficial weather in India and Brazil is likely to result in improved crop yields. Moreover, recent USDA report continued to create heavy pressure on grain commodities.
Wheat was the worst-performer after Canada announced that it expects wheat crops to increase by 5.7% from the initial estimate in a year starting Aug. 1.
Corn dropped the most in the five weeks on speculation that demand will soften after US drought pushed corn prices to record level this month.
Sugar slid as drought concerns in India eased after recent rainfalls. Additionally, better weather in Brazil is expected to boost sweetener’s crops.
Coffee retreated, approaching the lowest level in three months after coffee crops in Colombia rose by annualized 26% in July.
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
