Precious Metals: Gold slid on profit taking
Precious metals apart from gold advanced on Tuesday amid persistent supply concerns and broadly weaker US Dollar. Disappointing economic data from the Eurozone coupled with political instability in Spain and Italy boosted safe-haven appeal of the commodity complex.
Gold was the only loser as a recent increase in prices spurred profit taking. Meanwhile, signs of strong physical demand from central banks as well as hopes for stimulus measures across the globe continued to support the yellow metal.
Silver rebounded, tracking strong global equities and softer greenback. Moreover, a jump in demand for US 2013 American Eagle silver coins added to gains of the grey metal.
Platinum surged to a 17-week high on persistent worries that global demand will outplace supply after a sharp drop in South African platinum output. Global platinum production is expected to slump 10% this year, according to Johnson Matthey.
Palladium soared as deficit on the physical market may be exacerbated by robust demand from automobile producers.
Industrial Metals: Aluminum inched up on weaker greenback
Industrial metals except for aluminum slumped on Tuesday as market sentiment remained weak amid political turmoil in Spain and Italy. Spain’s PM Mariano Rajoy faced allegations of corruption and was called to resign by the opposition party. Meanwhile, uncertainty over Italy’s general elections also weighed on risk appetite.
Aluminum was the only gainer, recovering some of the previous losses amid weaker US Dollar. However, weak numbers from the Eurozone as well as bloated LME inventories continued to weigh on the light metal.
Copper retreated amid renewed political woes in the Eurozone. However, the downswing was capped by signs of robust investment demand. The value of assets held in ETF climbed to USD48 million in the beginning of February, compared to USD16.4 million in the beginning of January.
Nickel slid amid elevated LME inventories. However, potential increase in demand from stainless steelmakers limited losses of the metal.
Zinc declined amid bloated LME stockpiles and pessimistic headlines from the Eurozone.
Energy: Crude oil climbs ahead of EIA weekly report
Energy futures were bullish on Tuesday on positive news from the US. US budget deficit is expected to fall to USD845 billion this year, according to the US Congressional Budget Office. However, market players remained cautious ahead of the EIA weekly report due on Wednesday.
Crude oil climbed on the US deficit hopes. Meanwhile, analysts expect the EIA report to show a 2.7-million-barrel increase in the US crude oil inventories last week.
Brent oil advanced, following crude oil’s jump. The commodity continued to draw strength from escalated geopolitical tensions in the Middle East. However, rising output in Saudi Arabia and turmoil in the Eurozone weighed on Brent oil futures.
Natural gas jumped after updated weather forecasts called for below-normal temperatures in the US in the next 11-to-15 days. Pushing natural gas higher, US inventories probably dropped 135 billion cubic feet last week.
Heating oil traded higher ahead of the US inventory data scheduled on Wednesday. Heating oil found support on colder weather forecasts and weak US Dollar.
Agriculture: Wheat slumps as US stocks may be higher than forecast
Rural commodities tumbled on Tuesday on weak demand for riskier assets amid political instability in the single currency union. Moreover, speculation that weather conditions in the US and Argentina may improve weighted on the grains. Ample global supplies also put pressure on farm commodities.
Wheat sagged 0.72% on speculation that US inventories may be higher than predicted. US wheat stockpiles are likely to be one million bushel higher than estimated by the USDA. The USDA will update its forecasts on February 8.
Corn finished in red territory on signs of vanishing demand for US grains. US corn exports tumbled to the lowest mark since July 2003 in the week ended January 25.
Sugar was the top loser despite speculation that a recent decline in the sweetener’s prices may prompt Brazilian farmers to use cane for producing ethanol instead of sugar. Brazil ethanol output may increase 14% in 2013-24 marketing year that starts in April, reported Copersucar SA.
Coffee retreated despite expectations of a decline in Brazil’s and Vietnam’s production. According to Hackett Financial Advisors, coffee market may even swing to deficit of two million bags in 12 months starting October 1.
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
