Precious Metals: Silver moves higher on weak US Dollar
Precious metals climbed in post-holiday session, being boosted by weaker US Dollar. However, safe-haven appeal of the commodity group was dampened by mounting hopes that US lawmakers will manage to avert so-called fiscal cliff. US President Barack Obama is expected to return to Washington on Thursday to participate in fiscal talks.
Gold added 0.10% despite softer demand for safe-haven assets amid optimism over US budget agreement. The yellow metal found support on weaker greenback and strong demand from central banks.
Silver jumped after the US Dollar index, which monitors greenback’s performance against a set of six major currencies, slid 0.3%. However, mixed global equities as well as US fiscal hopes capped gains of the grey metal.
Platinum and Palladium rose as US fiscal dispute resolution may spur industrial demand prospects for the metals. Additionally, global deficit concerns continued to lend support for platinum palladium prices.
Industrial Metals: Copper drops 1.5% on weekly basis
Base metals were bearish over the last week as market players were worried about lack of progress in the US fiscal standoff. Moreover, weak industrial figures from the US added pressure on the industrial metals. Richmond Fed manufacturing index slumped to 5.0 in December in contrast to forecasts of an increase to 12.0 this month. However, the reading above 0.0 still signals improving conditions.
Aluminum lost 0.50% over the week on persistent pressure from elevated LME inventories. Last week, LME stocks reached a record high of 5.24 million tonnes.
Copper finished the week in red territory on the US fiscal uncertainty and high LME and SHFE stockpiles. SHFE stocks attained seven-month high while LME inventories reached almost one-year high last week.
Nickel extended losses, falling 2.50% on a weekly basis amid bloated LME stocks and rising production in Indonesia.
Zinc dropped, tracking high LME stocks and weakness of the industrial metals sector.
Energy: Brent oil jumped on US fiscal hopes, upbeat US housing data
Energy futures advanced on Wednesday on hopes that US officials will resolve the budget impasse thus avoiding recession in the country. Moreover, larger-than-expected increase in the US home prices in October as well as weaker greenback spurred rally of the commodity group.
Crude oil rebounded on expectations that US lawmakers will reach an agreement on fiscal policy before the January 1 deadline. Meanwhile, investors continued to await fresh EIA weekly oil supplies report due on Friday. Experts claim crude oil stocks may have declined by 1.6 million barrels last week.
Brent oil bounced off recent lows as optimism over US fiscal negotiations revived energy demand prospects. Upbeat data from the US housing market coupled with soft US currency added to gains of Brent oil futures.
Natural gas climbed on bright short-term demand expectations for heating fuel. Updated weather forecasts indicated colder-than-normal temperatures in the most US territory in the next seven-to-ten days.
Heating oil gained 1.64%. Colder temperatures and potential drop in the US inventories last week lifted the commodity.
Agriculture: Corn dipped after USDA report on US exports
Farm commodities were mixed in post-holiday trade on Wednesday. Improved risk sentiment due to hopes for US fiscal deadlock resolution was supportive for rural commodities. At the same time, weak US export data weighted on grains.
Wheat was the top-loser after the USDA reported that US exports dropped 9.1% to reach the lowest level since 2009 in the week ended December 20. However, speculation that a fall in prices will attract importers from the Middle East limited the downswing.
Corn slumped on signs of weak demand for US supplies. US corn inspected for export dipped 18% in the week ended December 20 from a week earlier. US exports tumbled 66% year on year last week, according to the USDA.
Sugar moved higher despite ample global supplies and rising refined sugar exports from India.
Coffee was the top-performer on recent Barclays’ comments that Brazilian harvest will be lower next year due to low-yielding crop cycle. The bank also highlighted high potential for short-covering after a recent drop in Arabica coffee prices.
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
